On Friday, the Nigerian National Petroleum Company Limited (NNPC) and foreign oil firms doing business in Nigeria inked a number of contracts that would guarantee the production of roughly 10 billion barrels of crude oil and bring in more than $500 billion in income for all parties.
Officials from the NNPC and its IOC counterparts, comprising Shell, Chevron, Texaco, Sinopec, Sapetro, and Esso Exploration and Production Nigeria Limited, extended their contracts for five Oil Mining Leases, or OMLs, including OMLs 128, 130, 132, 133, and 138.
At a signing ceremony conducted at the NNPC headquarters in Abuja, the parties extended a number of agreements, including production sharing contracts 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 that we had today.
“And this by no means will give significant revenue for all the parties. We expect over $500bn of revenue for all the stakeholders.”
Earlier, the Group Chief Executive Officer, NNPC, Mele Kyari, had explained that the Petroleum Industry Act 2021 gave NNPC the legal backing to renegotiate all its existing PSCs in conformance to the provisions of the new Act within one year.
The PIA became law on August 16, 2021, after it was signed into law the same day by the President, Major General, Muhammadu Buhari (retd.).
The PIA in Section 311(2) stipulates that new PSC agreements under new heads of terms will be signed between NNPC Ltd as a concessionaire and its contracting parties within one year of signing the PIA into law, giving a deadline of August 15, 2022.
Kyari noted that this provision paved the way for the resolution of lingering disputes which created investment uncertainty and stifled new investments in the nation’s deep offshore assets.
To achieve this, he said NNPC leveraged the near end-term of the PSCs and the parties’ interest to renew the PSCs as a negotiation currency in bringing the contractors to work towards trading 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 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.”
