Nigerian National Petroleum Company Limited (NNPC) and International Oil Companies (IOCs) operating in Nigeria have signed various agreements that would ensure the production of about 10 billion barrels of crude oil with a view to generating over $500bn revenue to all parties involved.
Officials of IOCs which include Shell, Chevron, Texaco, Sinopec, Sapetro, Esso Exploration and Production Nigeria Limited among others and their counterparts from NNPC renewed their agreements in five Oil Mining Leases, OMLs, that included OMLs 128, 130, 132, 133 and 138.
Production Sharing Contracts as well as Dispute Resolution Agreements were the agreements renewed by the parties at the signing ceremony which took place at Abuja headquarters of NNPC on Friday.
While 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.”
The Group Chief Executive Officer, NNPC, Mele Kyari, had earlier 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 a one-year period.
The PIA became law on August 16, 2021 after it was signed into law the same day by the President, Muhammadu.
In Section 311(2), the PIA stipulates that new PSC agreements under new heads of terms will be signed between NNPC Ltd as 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.
According to him, 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 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.”