Section 85: Model Contracts.

1 The Commission shall develop a model licence and model lease, which may contain an obligation to comply with fiscal obligations and other provisions related to fees, rents, royalties for such contract attached to or incorporated in the model licence or model lease.

2 The model licence and model lease referred to under subsection (1) shall comply with the provisions of this Act and may contain the following additional contractual provisions—
a a production sharing contract for the exploration, development and production of petroleum on terms under which the financial risk-bearing party shall recover costs from a share of production as established in the contract from the applicable area;
b a profit sharing contract which is a production sharing contract whereby the profit oil is provided in cash to Government;
c a risk service contract for the exploration, development and production of petroleum on terms under which the financial risk-bearing party shall recover costs by a payment in cash or in kind from petroleum produced from the applicable area;
d a concession agreement for exploration, development and production of petroleum, which may include an incorporated or unincorporated joint venture with NNPC Limited; and
e any contract being a variation of the contracts under paragraphs (a), (b), (c) or (d) or a contract which, at the time, is an internationally recognised form of contract for the exploration and production of petroleum.

3 A licence or lease described under subsection (1) shall not be granted by the Minister unless the appropriate model contract is attached to the licence or lease as a guide on the relevant fiscal obligations.

4 A contract as provided for under section 85 (2) (d) of this Act shall include a carried interest provision, whereby—
a the Government through the NNPC Limited has the right to participate up to 60% in the contract or identified as a bid parameter;
b the right to participate shall be from any time upon the granting of the licence or lease;
c the contract shall stipulate that Government shall refund fully its proportionate share of the unrecovered proven costs from the date of its participation and such refunded cost shall relate to development and production and shall not include bonuses and penalties, interest, premium or markups on cost;
d the contract shall not require any upfront payment by the Government;
e the nature, the validity and quantum of the unrecovered costs to be refunded shall be determined or verified by an agreed expert determination procedure;
f the refund obligation under this subsection may be in the form of cash or kind from future share of production or entitlements from the effective participation date; and
g the terms, conditions and financial details of any right of participation by the government under this subsection shall be contained in the model contract prepared by the commission in consultation with NNPC Limited.