THE Nigerian National Petroleum Company Limited (NNPCLtd) has signed a contract extension with five oil majors, hoping to earn about $500 billion investment from the deal.
The Chief Executive Officer of the NNPCLtd., Mele Kolo Kyari, said at the signing ceremony today in Abuja that the contract extension became realisable after President Muhammadu Buhari directed that disputes regarding ease of doing business raised by international oil companies (IoCs) be addressed.
Most of the oil majors, Kyari noted, had expressed worry about rising oil theft in Nigeria’s oil-rich Niger Delta, which they complained was affecting their businesses.
Kyari said the development was “a major step towards boosting Nigeria’s crude production and unlocking investments in the deepwater space post-Petroleum Industry Act (PIA) enactment.”
He disclosed that the NNPCLtd and its production sharing contracts (PSCs) contractors had resolved their disputes and signed renewed PSCs.
The PSC partners of the NNPCLtd who renewed their partnerships 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 contract extension focused on five Oil Mining Leases (OMLs 128, 130,132, 133, and 138), a development that is expected to unlock over $500 billion in revenue for the country.
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ExxonMobil took to Twitter to announce the renewal of its OMLs 133 (Erha) and 138 (Usan) deepwater leases for a further 20–year period.
The Tweet read: “This includes extensions of Production Sharing Contracts with our partner, NNPC Limited.
“These renewals validate earlier commitment to maintaining a significant deepwater presence in Nigeria, via Esso Exploration and Production Nigeria (Deepwater) Limited,” the oil major tweeted.
ExxonMobil confirmed the deals were among the first post-Petroleum Industry Act deepwater lease renewals.
It said, “We applaud the Ministry of Petroleum Resources for providing the focused leadership and partnership that has led to this achievement.
“Further, these extensions enable us and our partners to unlock the potential value in these OMLs and to bring forward additional investment.”
The Chief Executive Officer of the Pipelines and Products Marketing Company (PPMC), Bala Wunti, said the sum of $4 billion was already being expected from the contract deal this year.
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Wunti said, “We knew that a day like this would come. We are aligning with our partners to expand production and meet up with our quota. Already, we are expecting $4bn foreign direct investment this year from the deal.
“We are also intensifying our efforts to ensure we do more gas production with the deal due largely to global focus on clean energy.
“As a result of this contract extension, some greenfied projects have been lined up for their final investment destinations, which would be perfected in 2023 and 2024.”
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 reserves and improve the economy of the country, introduced the Production Sharing Contract initiative 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.