Nigeria signs upstream oil and gas PSC

Nigerian National Petroleum Company (NNPC), in collaboration with the TotalEnergies and Sapetro Consortium, has signed a production sharing contract (PSC) for petroleum prospecting licences (PPLs) 2000 and 2001.

This event marks the inaugural PSC in Nigeria covering exploration and production (E&P) for both crude oil and natural gas.

NNPC group CEO Engr. Bashir Bayo Ojulari said: "This particular PSC is unique in many respects. It is the first PSC that comprehensively covers its scope, both crude oil and natural gas. It is the first PSC with robust gas terms including a profit gas fleet that incentivises monetisation of non-associated gas.”

This move is line with the federal government's focus on leveraging Nigeria's hydrocarbon resources profitably and responsibly.

Encompassing approximately 2,000km², the awarded offshore blocks are a result of a transparent and competitive framework under the Petroleum Industry Act (PIA) 2021.

The partnership aims to utilise expertise and technology to surpass the successes of previous deep-water projects, ensuring commercial viability and sustainability.

TotalEnergies and Sapetro, the contractors, hold an 80% and 20% interest, respectively, in the blocks.

TotalEnergies, which has operated in Nigeria for more than six decades, is the first international oil company to secure deep-water assets in the country in over a decade.

The blocks are poised to increase reserves and assure long-term production growth, which is crucial for creating value for shareholders, stakeholders and the country.

This PSC encompasses various provisions that align with the PIA, such as a certain minimum work programme backed by performance assurances, signature and production bonuses, cost recovery and profit-sharing rules, royalties and taxes.

It also addresses gas usage to reduce flaring, and sets obligations for decommissioning, environmental remediation and the advancement of surrounding communities.

In a related development last month, NNPC and several upstream gas supply companies signed gas supply agreements with the Nigeria Liquefied Natural Gas.

"Nigeria signs upstream oil and gas PSC" was originally created and published by Offshore Technology, a GlobalData owned brand.

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