The Nigerian National Petroleum Company Limited (NNPC) and foreign oil companies doing business in Nigeria inked several agreements that would guarantee the production of roughly 10 billion barrels of crude oil and bring in more than $500 billion in revenue for all parties.
Officials from the NNPC and their IOC counterparts, comprising Shell, Chevron, Texaco, Sinopec, Sapetro, and Esso Exploration and Production Nigeria Limited, renewed their contracts for five Oil Mining Leases, or OMLs, including OMLs 128, 130, 132, 133, and 138.
At a signing ceremony held at the NNPC headquarters, the parties extended several agreements, including production-sharing and dispute resolution agreements.
Speaking at the event, the Group General Manager, National Petroleum Investment Management Services, Bala Wunti, said, “Cumulatively, we hope to produce and monetise over 10 billion barrels of oil with these signatures today.
“And this by no means will give significant revenue for all the parties. We expect over $500bn of revenue for all the stakeholders.”
The Petroleum Industry Act 2021 provides NNPC with the legal support to renegotiate all of its current PSCs following the new Act’s provisions within a year, according to earlier explanations from Group Chief Executive Officer of NNPC Mele Kyari.
President Muhammadu Buhari, signed the PIA into law on August 16, 2021, making it a legal document (retd.).
Following the PIA’s Section 311(2), NNPC Ltd., the concessionaire, and its contracting parties must sign new PSC agreements with updated heads of terms no later than one year after the PIA is signed into law, or by August 15, 2022.
Kyari pointed out that this clause prepared the door for settling old conflicts impeding investment and preventing fresh capital from flowing into the country’s offshore holdings.
He claimed that NNPC used the PSCs’ impending expiration dates and the parties desire to extend them as a bargaining chip to get the contractors to cooperate in exchanging the past for the future.
“These renewed PSCs would provide several benefits such as improved long-term relationships with contractors, elimination of contractual ambiguities especially in relation to gas terms, enablement of early contract renewal, among others,” he stated.
Kyari added, “The signing of the new PSCs is a key milestone achievement by NNPC Ltd, which would ultimately unlock opportunities within the Nigeria upstream sector.
“The execution of the PSCs will deepen investment and development of Nigeria’s rich petroleum resources and ensure that the trifold mandate of the NNPC Ltd to ensure energy availability, sustainability, and accessibility is achieved.
“Ultimately, the new PSCs will provide an inflow of Foreign Direct Investment, expanded access to affordable energy, job creation and socio-economic development.”
