Nigerian National Petroleum Company (NNPC), the state energy firm, announced the signing of a series of Production Sharing Contractors (PSC) aimed at boosting offshore oil production.
Fully termed agreements were signed off with renegotiated PSCs for five oil mining leases (OMLs 128, 130, 132, 133, and 138). NNPC said this development would unlock further investments in the upstream sector and boost investors’ confidence, while unlocking US$500 billion in revenue for the country.
Chief Executive Officer for the NNPC Group, Mallam Mele Kyari said the renegotiations of the assets were in line with the provisions of the Petroleum Industry Act (PIA), legislated in 2021. They are said to include improvements that now bring a great deal of clarity between NNPC and its partners in the deepwater space.
Representatives of ExxonMobil, Shell, and Chevron applauded the event as progressive toward harnessing the deepwater resources of Nigeria safely and reliably. The negotiations, NNPC said, will put to rest protracted disputes between the state company and the contractor parties. The PSCs and their leases will run for another 20 years term under pre-PIA terms, except for OML 130 which will be renewed under PIA terms.
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The PIA in Section 311(2) stipulates that new PSC agreements under new Heads of Terms will be signed between NNPC Ltd as Concessionaire and her Contractor Parties within one year of signing the PIA into law, giving a deadline of August 15, 2022, NNPC said. It explained that the provision paved the way for the resolution of lingering disputes which had created investment uncertainty and stifled new investment in the nation’s deep offshore assets.
“These renewed PSCs would provide several benefits such as improved long-term relationships with contractors, of contractual ambiguities especially in relation to gas terms, enable early contract renewal amongst others,” NNPC said.
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NNPC has been at pains to secure investor confidence, as it has long struggled with loss of value from crude oil theft and pipeline vandalism. The government of Nigeria said that NNPC, in the last five months, was able to mobilise to recover/prevent the theft of 25 billion naira of stolen crude oil and products.
The company also recently unveiled the new Nigerian National Petroleum Company Limited, officially changing the oil firm from a wholly state-run entity to a commercial oil company, limited by shares. It will now be managed as a private enterprise.