…The new pacts will rake in N500bn for Nigeria – Kyari
Nigerian National Petroleum Company (NNPC) has renewed licences with a number of international oil and gas companies in the deepwater in a fresh move to open new frontiers in view of the company’s new form as a private sector oil exploration company.
At a recent ceremony in Abuja, the top management of the NNPC put pen to paper with the partners for the new production-sharing contracts (PSCs).
Speaking, the managing director of the NNPC, Mr. Mele Kyari said the agreements would unlock new investments and provide more than $500 billion of revenue for Nigeria.
He said the agreements provided “a great deal of clarity between NNPC Ltd and its partners in the deepwater space.”
The NNPC agreed to extensions for five licences, for OMLs 128, 130, 132, 133 and 138. However, only one of them, OML 130, was renewed in line with the new Petroleum Industry Act (PIA). The other four have received approval to run for another 20 years – but under pre-PIA laws.
Operators of the licences include, OML 130 is operated by TotalEnergies and covers the Akpo and Egina fields; Equinor operators OML 128 on part of Agbami-Ekoli; Chevron holds OML 132, on part of Bonga South West Aparo (BSWA), while ExxonMobil holds OML 133, on Erha, and OML 138 on Usan.
The NNPC boss explained that the four non-PIA extensions were in line with section 311 of the legislation. “This provides for any previous contracts to be extended, as long as they do not contradict the PIA,” he said.
The PIA legislation stipulates that where extensions are under negotiation on the signing of the law, the parties had a year to wrap up negotiations.
It will be recalled that President Muhammadu Buhari signed the Petroleum Industry Act into law on a year ago, (August 16, 2021.).
It was further explained that the extensions had taken place within the timeline specified. NNPC went on to say it had “leveraged … the near end term of the PSCs” as “negotiation currency” in order to bring the contractors onboard.
The extensions bring to an end the “protracted dispute” between NNPC and the international companies, it said.
Stakeholders who witnessed the event include the NNPC board chairman, Senator Margery Chuba-Okadigbo, upstream regulator head, Mr. Gbenga Komolafe, midstream regulator head, Mr. Farouk Ahmed and executive chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami.
Also there was Shell country chair, Osagie Okunbor, Exxon Nigeria chairman, Richard Laing and Chevron Nigeria chair, Rick Kennedy also attended.
Nigeria chairman, Richard Laing, said the renewals validated the company’s “earlier commitment to maintain a significant deepwater presence in Nigeria, via Esso Exploration and Production Nigeria (Deepwater).”
Exxon is in the process of trying to sell off its joint venture business in the country, to Seplat Energy, although has encountered challenges from Nigerian regulatory authorities.
“Further, these extensions enable us and our partners to unlock the potential value in these OMLs and to bring forward additional investment,” Exxon said.
Equinor also welcomed the extensions. The company said, with Chevron and NNPC, it had “extended the OML 128 license to continue to produce oil from Nigeria’s Agbami field for at least two more decades, a deal that not only secures value for the operating partnership but also provides crucial income for Nigeria’s economy, local employment and supplies.”
Africa Oil, a junior partner in OML 130 commenting before the grant of extensions, noted the way in which contract certainty would trigger new investments. Conversion of OML 130 to PIA terms “could facilitate the final investment decision [FID] for the Preowei oil discovery”, it said.
Preowei is an oilfield to the north of the Egina FPSO. The plan would involve a satellite subsea tie-back project to the Egina FPSO.
Africa Oil, working through Prime Oil and Gas, said it was also working on the early renewal of OML 127 and conversion to PIA terms.