NNPC To Save Nigeria $9bn In New PSC Agreement With Oil Majors

…Unveils New Reporting App To Check Crude Oil Theft On Friday

The Nigerian National Petroleum Company Ltd will on Friday seal a new Production Sharing Contact agreement with oil majors in the country.

The deal is expected to be signed at the headquarters of the NNPC LTD on Friday in Abuja.

The deal has been described as a landmark achievement for the administration of President Muhammadu Buhari as it would save Nigeria about $9bn contingent liabilities that have crystallized for the federation.

The federal government had in a bid to overcome the funding challenges in the oil and gas sector as well as enhance the country’s oil reserve and improve the economy of the country, introduced the Production Sharing Contract as a policy for the exploration of the country’s petroleum resources.

This policy is mainly regulated by the Deep Offshore and Inland Basin Production Sharing Contract Act, Laws of the Federation of Nigeria 2004.

Under this policy, the NNPC engages a competent contractor (Petroleum Exploration and Production Companies or its Subsidiary) to carry out petroleum exploration in Nigeria.

Some of the Production Sharing Contract partners of the NNPC LTD are Shell Nigeria Exploration and Production Company (SNEPCo), Total Exploration and Production Nigeria Limited (TEPNG), Esso Exploration. and Production Nigeria Limited (EEPNL), and Nigerian Agip Exploration (NAE).

THE WHISTLER learnt that the closure of the 1993 PSC is a critical component of the reforms being implemented under the Petroleum Industry Act 2021.

The new PSC agreement to be signed on Friday is expected to attract significant interest of the global energy community, including the financing world.

If implemented effectively, it would save potential contingent liability of over $9bn for NIgeria.

This savings is a major achievement of the administration of President Muhammadu Buhari because all successive governments have been shielding away from its resolution.

The deal also promises greater tax and royalty revenues, clarity of fiscal terms and contractual rights and responsibilities.

The agreement also promises huge returns on massive investments in the Deepwater Niger Delta region.

Also, in what could be described as another landmark achievement for Nigeria, the NNPC will on Friday unveil a Crude Theft Reporting and Validation App.

The App will help to check crude oil theft in the country and enable prompt reporting by community members.

The App will also enable overseas buyers to validate the originality of all crude oil received from Nigeria.

The theft of crude oil has been frustrating the efforts of the government in attracting fresh investments into the oil and gas industry through the implementation of the Petroleum Industry Act.

Nigeria is losing 400,000 barrels per day to crude theft, the Minister of State Petroleum, Timipre Sylva said on Tuesday.

Within a three months period covering January 1 and March 31 this year, Nigeria lost a whopping amount of $1bn revenue to crude oil theft.

Four months ago, the Minister of Petroleum Resources, Timipre Sylva the Chief of Defence Staff Lucky Irabo and the NNPC LTD Group Chief Executive Officer Mele Kyari, visited the Niger Delta for an on-the-spot assessment of the damage done by vandals.

Just last month, Kyari, the European Union Delegation, top officials of the NNPC Ltd as well as representatives of security agencies again visited the Niger Delta Creeks to assess the ongoing fight against crude oil theft, illegal bunkering and vandalism of oil and gas installations.

Two days ago, Sylva, Irabor; Kyari and other top officials of government visited the Governor’s of Imo, Bayelsa and Delta States to get their support in tackling crude oil theft.

These visits underscore the efforts of the government in finding a lasting solution to the issue of crude oil theft and pipeline vandalism.

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