Nigerian National Petroleum Corp. (NNPC) has renewed licences with leading international companies in the deepwater in a move expected to unlock new investments.
NNPC said the agreements would unlock new investments and provide more than $500 billion of revenue for Nigeria. The company held a ceremony at its headquarters in Abuja for the new production-sharing contracts (PSCs).
NNPC CEO Mele Kyari said the agreements provided “a great deal of clarity between NNPC Ltd and its partners in the deepwater space”.
© Supplied by NNPCNNPC agreed to extensions for five licences, for OMLs 128, 130, 132, 133 and 138. However, only one of these, 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.
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). ExxonMobil holds OML 133, on Erha, and OML 138 on Usan.
Leverage
Kyari said 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.
The legislation did go on to say that where extensions are under negotiation on the signing of the law, the parties had a year to wrap up negotiations. President Muhammadu Buhari signed the PIA on August 16, 2021.
Kyari agreed 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.
© Supplied by NNPCA number of high-ranking Nigerian officials attended the ceremony. These included NNPC chair Senator Margery Chuba-Okadigbo, upstream regulator head Gbenga Komolafe, midstream regulator head Farouk Ahmed and executive chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami.
Shell country chair Osagie Okunbor. Exxon Nigeria chairman Richard Laing and Chevron Nigeria chair Rick Kennedy also attended.
Investment options
Exxon said the renewals validated its “earlier commitment to maintain a significant deepwater presence in Nigeria, via Esso Exploration and Production Nigeria (Deepwater)”. The company is in the process of trying to sell off its joint venture business in the country, to Seplat Energy, although has faced challenges.
“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 on August 10.
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.