Oil deal: NNPC, IOCs target $500bn revenue in 20 years

NNPC retail outlet

The Nigerian National Petroleum Company (NNPC) Ltd has sealed five strategic agreements to renew oil production sharing agreements with Oil Majors, with a view to unlocking huge investments in the nation’s oil and gas sector.

The move was also aimed at enhancing the revenue inflow of foreign direct investment, expanding access to affordable energy, and creating more job opportunities.

The agreements, the Production Sharing Contract (PSC), Dispute Settlement Agreements (DSA), Settlement Repayment Agreement, and Escrow Agreement covering five Oil Mining Licences (OMLs 128, 130,132, 133, and 138), are expected to unlock over $500 billion revenue for the country and produce up to 10 billion barrels of oil over the next 20 years.

Oil Majors, who signed the pact with NNPC Ltd, include Shell, Equinox, Chevron, Total Energies, Texaco, EssoExploration, China’s Sinopec, and Nigerian firm South Atlantic Petroleum.

The Group Chief Executive Officer of the NNPC LTD, Mele Kyari who spoke during the sealing of the agreements in Abuja on Friday, noted that investments in the sector have been slowed by disputes occasioned by failure to clearly understand the agreements businesses were going into.

Kyari, who explained that the renewed partnership would save Nigeria about $9 billion in contingent liabilities, added that with the agreements they would be minimal ambiguities in contracts which would be resolved amicably just as all existing ambiguities have been resolved.

He said: “These companies have been having misunderstanding which is a major issue to all of us leading to arbitration and all source of litigations. It does two things; tarnishes relationships and more than anything else, stiffens investment.

“Today we are happy and I understand very clearly that it won’t have been possible except you have some courage of leadership and all of us must give this credit to President Muhammadu Buhari who agreed that we must resolve this in the most amicable manner and in a manner that the country will benefit from it.

“The Dispute Settlement Agreement will ultimately put in place the recognition of the Production Sharing Contract and more than anything to put aside debt extending disputes we have with our partners and this is over.

“This is history for this country and we must accept this. With the signing of the DSA, every investment will come back because uncertainties have been removed, new investors will come in because of the terms in the Petroleum Industry Act that enables recovery of cost. Needless to say that relationship will always have issues, we’ll continue to resolve them in the most amicable manner.”

The Group General Manager, National Petroleum Investment Management Services (NAPIMS), Bala Wunti, said the sealing of the agreements would lead to the production of 10 billion barrels of oil, unlock over $500 billion revenue for all stakeholders, and a direct foreign investment of about $4 billion in the year 2022 only.

He said: “Put this together it will bring in foreign direct investment of up to $4illion this year. More importantly, it will bring over 600 million cubic of gas, and in our branding, as a gas country, it will also come along with its associated oil of up to 200,000 barrels. This is this year and these are brownfield projects.

“Cumulatively we hope to produce and monetize over 10 billion barrels of oil with this signature we had today and this by no means will bring a significant amount of revenue for all the participants. We expect over $500 billion of revenue for all the stakeholders.”

The Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, who described the renewal of the regulated PSC as a major milestone under the PIA 2021, urged the NNPC Ltd to turn the country’s weaknesses into strength and work toward expanding its portfolios like Petrobas and Aramco.

The Star