The Nigerian National Petroleum Company Limited (NNPCL), in partnership with TotalEnergies and South Atlantic Petroleum (SAPETRO), has finalized a new Production Sharing Contract (PSC) for deepwater Petroleum Prospecting Licences (PPLs) 2000 and 2001.
The agreement, signed under the supervision of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), represents a significant milestone in the implementation of the Petroleum Industry Act (PIA).
The licences awarded to TotalEnergies and its partner South Atlantic Petroleum (SAPETRO) in the 2024 Licensing Round marked the closing ceremony of the 2024 Licensing Round which was held on Monday at the Commission’s headquarters in Abuja.
The Commission Chief Executive, Engr. Gbenga Komolafe, said the deal marks a new chapter in Nigeria’s upstream oil and gas industry, adding that President Bola Ahmed Tinubu’s 2024 Executive Orders: #40 on fiscal incentives, #41 on local content, and #42 on cost efficiency and contract timelines, have catalysed massive investment inflows for shared prosperity.
The CCE said the awardees of PPL 2000 and PPL 2001 are beneficiaries of the reforms of President Tinubu.
However, he noted that “Every award has very clear terms about its tenure but the clear provisions of the PIA being the instrument that guides our regulatory activities is that unexplored acreages are expected to be relinquished apart from the clear terms of the award itself.”
NUPRC lauds TotalEnergies
Komolafe congratulated TotalEnergies on its success in the Licensing Round. TotalEnergies has over 60 years of operations in Nigeria and holds 80% contractor interest, as well as Sapetro with 30 years of operations and holding 20% contractor interest.
He reiterated that the Licensing Round was based on a fair, transparent, and competitive bidding process in line with Section 73 of the PIA.
He commended President Ahmed Tinubu for vacating entry barriers.
The CCE commended the NNPCL and the Consortium for their role in exploration and production activities in Nigeria.
The CCE said, “This PSC signals the start of a committed work programme that will help us unlock the untapped geological potential of our deep-water, expand our reserves, boost production, and strengthen Nigeria’s energy security.”
According to him, the PSC sets out rules including payment of a signature bonus as stipulated in the licensing round and production bonuses tied to commercial milestones, ensuring Federation obligations relating to Decommissioning and Abandonment and Environmental Remediation Fund; a defined minimum work programme, with the requirement to provide guarantees to assure performance, among others.
The CCE pledged NUPRC’s commitment to continue providing a level playing field, to reduce uncertainty, and foster ease of doing business.
What the NNPCL GCEO said:
Speaking at the event, the Group Chief Executive Officer of NNPC, Mr. Bashir Bayo Ojulari, thanked the leadership of the NUPRC for overseeing the licensing process in a fair and transparent manner.
He said the PSC is unique because it is the first PSC that comprehensively covers in scope both crude oil and natural gas.
The GCEO said following the PIA, tapping non-associated gas in the deep water is one of the areas the industry needed to push the frontiers. He said the PSC also has an incentive for performance which includes a $10m signature bonus, a production bonus of two million and four million barrels or a cash payment on attainment of 35 million barrels of production, respectively.
Ojulari said, “The PSC is a major milestone that speaks to the regulator’s commitment to implement the provisions of the PIA and will bring NNPCL closer to achieving the target of three million barrels per day and additional investments of $60bn by the end of 2030.
“I look forward to the CCE for many more bids like this and we will be leveraging this to actually demonstrate as we explore the opportunities that are in the Nigerian deep water. We will be marketing this outcome and we look forward to the next bid round.”
The Managing Director of TotalEnergies, Mr. Mathieu Bouyer, thanked the CCE for the work done in ensuring the smooth conduct of the 2024 bid round.
He said, “This moment comes after extensive deliberations, rigorous evaluations, and, above all, an open and transparent bid process concluded on December 18, 2024. We are honoured to be the first International Oil Company to be awarded an explo block in 10 years and that our joint bid with our partner Sapetro was successful. Today marks the formal beginning of what we hope will be another chapter of value creation in Nigeria’s upstream sector.”
Bouyer added, “We are eager to progress swiftly and responsibly with the implementation of the agreed work programme for both blocks. We are actively progressing towards spudding our first well on the blocks in the shortest possible timeframe.”
The Managing Director of SAPETRO, Mr. Chukwuemeke Anagbogu, said the process went through a “very transparent and completely free process,” adding that NUPRC showed leadership throughout the process.
Why This Matters
The PSC represents the first deep-water deal in a decade to attract a major international oil company.
This PSC is the first PSC with robust gas terms including a profit gas fleet that incentivises monetisation of non-associated gas
The contract is expected to:
- Unlock new deep-water reserves and increase Nigeria’s crude oil and natural gas production.
- Strengthen energy security by expanding domestic reserves and supply.
- Attract billions in fresh investment into Nigeria’s oil and gas sector, with projections of up to $60 billion by 2030.
- Boost government revenue through signature and production bonuses, taxes, and royalties.
- Create jobs and support local content, in line with President Bola Tinubu’s Executive Orders on fiscal incentives, local participation, and cost efficiency.
