BREAKING: NNPC Seals Pact With Oil Majors To Unlock Over $500bn Revenue For Nigeria

The Nigerian National Petroleum Company Ltd on Friday sealed five strategic agreements with oil about eight Oil Majors in the country that would unlock huge investments in the oil and gas sector in the country.

The agreements are the Production Sharing Agreement, Dispute Settlement Agreements, Settlement Repayment Agreement, Escrow Agreement.

The Group Chief Executive Officer of the NNPC LTD, Mele Kyari signed the deal on behalf of the company while the Chief Executive Officer of the major oil companies signed for their respective firms.

Some of the Companies are Total Energy, Chevron, Shell, Esso Exploration, Synopec, Equino, Sapetro, Sinoc

The event held at the headquarters of the NNPC was attended by the Chairman of the NNPC Board, Margary Okadigbo, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission Gbenga Komolafe, the Chief Executive of the Nigerian Downstream and Midstream Petroleum Regulatory Authority Farouk Ahmed, the Executive Chairman of the Federal Inland Revenue Service Mohammed Nami, the Group General Manager of the National Petroleum Investment Management Services Bala Wunti, Chief Financial Officer, Umar Ajiya and other top officials in the industry.

The deal which covers five Oil Mining Licences (OMLs 128, 130,132, 133, and 138) is expected to unlock over $500bn revenue for the country in the oil and gas sector and ensure energy security for Nigeria.

For OML 128, the NNPC LTD entered into four major agreements with Texaco, and Equinor.

The agreements are the Production Sharing Contract, Direct Settlement Agreement, Settlement Agreement and Escrow Agreement.

The Deepwater block OML 128 is located in the central part of the Niger Delta, in water depths ranging from 1,000 to over 2,000 metres. The block contains part of the giant Agbami-Ekoli field which came onstream in 2008. Gross reserves are estimated to be over one billion barrels.

For OML 130, the NNPC sealed two major deals with Sinoc and Septraco. The deals are Production Sharing Contract Agreement and the Settlement Repayment Agreement.

OML 130 is a deepwater block located 130 kilometres offshore Niger Delta at water depths of well over 1,000metres. The block contains the producing Akpo and Egina fields and Preowei discovery.

Similarly, the NNPC at the event entered into one major agreement (Petroleum Sharing Contract) with Texaco for the development of OML 132.

OML 132 is located in the western Niger Delta, approximately 113 kilometres offshore. The Aparo appraisal well encountered a substantial amount of net oil pay and indicated that Aparo and Bonga SW were one continuous structure.

For OML 138, the NNPC entered into a Production Sharing Contract and a Dispute Settlement Agreement with five oil majors. They are Total Energy, Chevron, Esso Exploration and Production, NEXAM and Synopec.

Similarly, two major agreements (Production Sharing Contract and Direct Settlement Agreement) were signed between the NNPC, Shell and Esso for the development of OML 133.

Speaking at the event, Kyari said that the signing of the agreements is consistent with the NNPC’s plan to deepen investment with its partners in the oil and gas sector.

He said the new partnership, would save Nigeria about $9bn contingent liabilities that have crystallized for the federation.

He said, “These companies have been having misunderstanding which is a major issue to all of us leading to arbitration and all source of litigations.

“And of course, as you do this, it does two things, tarnishes relationships and more than anything else, it stiffens investment.

“Today we are happy and I understand very clearly that it won’t have been possible except you have some courage of leadership and all of us must give this credit to President Muhammadu Buhari who agreed that we must resolve this in the most amicable manner and in a manner that the country will benefit from it.

“The dispute settlement agreement will ultimately put in place the recognition of the Production Sharing Contract and more than anything to put aside debt extending disputes we have with our partners and this is over.”

He commended the partners in the deal for the courage displayed in ensuring that all the disputes surrounding their operations in the oil and gas sector are resolved amicably.

The NNPC Boss expressed optimism that with the settlement of the issues, more investments will come into the country through the oil and gas sector.

“And I must sincerely appreciate these gestures, it’s not something that is significantly common. And the understanding that we have reached. This is history for this country and we must accept this and I believe very strongly on behalf of all of us in NNPC that with the signing of the DSA, every investment will come back because uncertainties have been removed, new investors will come in because of the terms in the petroleum industry acts that enables recovery of cost,” Kyari added.

In his address delivered at the event, the NAIMPS Boss said that the PSC in Nigeria was mainly motivated by funding challenges faced by the joint venture arrangements that led to reduction in production and revenue.

Wunti said with the introduction of the PSC into Nigeria’s hydrocarbon production algorithm, over 5.9 billion barrel of oil equivalent has so far been produced and monetized by the various PSCs arrangements.

Over the last two decades, he stated that the PSCs have commutatively accounted for about 40 per cent of Nigeria’s oil production.

However, he regretted that the implementation of the PSCs in Nigeria had been characterized by disputes over the years between the Contractors/ Operators and the Concessionaire (NNPC).

The disputes, he noted, had stifled investments in major Brownfield and Greenfield Deepwater projects.

He told the gathering that under the strong and commendable leadership of Kyari and the GED Upstream, Adokiye Tombomieye, NAPIMS as the Asset Manager of all the producing PSCs in Nigeria, has played pivotal roles in the renegotiation of major PSCs Assets under its supervision.

He gave some of these PSCs Assets to include OMLs 119, 125, 128, 130 ,132, 133 and OML 138.

He said, “The execution of the revised PSCs today will deepen investment and development of Nigeria’s rich petroleum resources and ensure that the trifold mandate of the NNPC Ltd to ensure security of energy supply, sustainability of Energy Supply, and accessibility is achieved.

“In anticipation of this history signing of the PSC, NAPIMS had been actively working in collaboration with PSC Contractors to emplace essential Final Investment Decision parameters for major Deepwater projects including Chevron-operated Agbami Gas Projects, Owowo and Bosi development by ExxonMobil, SNEPCO’s Bonga North and Bonga Southwest Aparo, Bolia-Chota, the Preowei Project being operated by TotalEnergies.

“NAPIMS in compliance with GCEO directive, together with its partners are aligned on 2022 as target FID window for Bonga New Oil Projects, Bonga North Project and Agbami Gas Projects.

“Cumulatively these brownfield projects will bring FDI of $4bn as well as bring additional volume of 170kbbls/d of oil and 560MSFD gas.”

He said the PSCs have cumulatively accounted for about 40 per cent of the combine Joint Venture and PSC production from the PSCs inceptions.

“Today, we are at the verge of making history, the history to resolve all pending disputes in our PSCs with a potential to develop and monetize over 10 billion bbls and potential generate revenue in excess $500bn to stakeholders, and attainment of energy security for the country,” he added.

In his comment at the event, Komolafe said the renewal of the regulated PSC is a major milestone under the PIA 2021.

The NUPRC Boss said, “I think this is a very commendable issue. Besides that, I have just two messages. The first is that the nation looks up to the NNPC, the NNPC should lead in turning our weaknesses into strengths and we are very confident that as a regulator, the NNPC, is fully prepared to lead operators and the second is the fact that with the reports that we see happening with the new NNPC, that in no times, NNPC will have presence expanding its portfolios like Petrobas and Aramco.

For Ahmed, he called on the players to focus more on develop the country’s gas resources since the federal government has adopted gas as Nigeria’s energy transition fuel.

He said, “Another area that I want to emphasize, as you are here and planning for future investments, please focus on gas assets. Lets focus on gas assets so that we can develop that midstream sector of oil and gas industry.”