Nigerian National Petroleum Company (NNPC) Limited has executed the agreements for the renegotiated Production Sharing Contracts (PSC) with contractors in five Oil Mining Leases (OMLs).
When consummated, it is believed the agreement would unlock over $500 billion in revenue to government from the country’s oil resources.
Aside the revenue opportunities, NNPC noted that the agreements in OMLs 128, 130, 132, 133, and 138 are set to unlock investment in the upstream sector and boost investors’ confidence.
Group Chief Executive Officer, NNPCL, Mele Kyari, said renegotiations of the assets were in line with Section 311 of the Petroleum Industry Act (PIA) 2021 with other improvements to the PSCs aimed at driving performance in the PSC operations.
Kyari noted that the negotiations were completed within the timeframe specified by PIA for all re-negotiated PSCs, stressing: “The meaning of this is that there is a great deal of clarity between NNPCL and its partners in the deepwater space.”
Country Chair, Shell Companies in Nigeria, Osagie Okunbor, described the execution of the OML 133 PSC contract as significant progress to harness the deepwater resources.
Also, the Chairman/Managing Director of ExxonMobil Companies in Nigeria, Richard Laing, said that the renewal of the Usan (OML 138) and Erha (OML 133) leases validates his company’s commitment to maintaining a significant deepwater presence in Nigeria, through Esso Exploration and Production Nigeria (Deepwater) Limited.
Chairman/Managing Director, Chevron Nigeria Limited (CNL), Rick Kennedy, said the oil giant is proud of its strong partnership with Nigeria and its various partners and remains committed to supporting the country to develop its energy resources safely and reliably.
The negotiations will put to rest the protracted dispute between the NNPC and the Contractor Parties in Oil Mining Leases (OMLs) 125, 128, 130, 132, and 133, as well as 138 PSCs). The PSCs and their leases, except OML 130, will run for another 20 years under pre-PIA laws, while OML 130 is to be renewed under PIA terms.
The PIA in Section 311(2) stipulates that new PSC agreements under new Heads of Terms will be signed between NNPC as concessionaire and her contractor parties within one year of signing the PIA, giving a deadline of August 15, this year. 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, NNPCL 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 gas terms and enable early contract renewal, among others.
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