Hot Source•Komolafe lauds Tinubu for removing obstacles in oil sector
•Ojulari: New deal moves NNPC closer to achieving 3m bpd, $60bn investment target by 2030
•TotalEnergies says it’s first exploration block by any IOC in 10 years
Emmanuel Addeh in Abuja and Peter Uzoho in Lagos
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday supervised the closing ceremonies for the execution of a Production Sharing Contract (PSC) for two offshore oil blocks concessioned by the Nigerian National Petroleum (NNPC) to the TotalEnergies–Sapetro Consortium.
The closeout on the assets, Petroleum Prospecting Licences (PPLs) 2000 and 2001, THISDAY learnt, is coming about nine months after an open and transparent bid process concluded in December 2024 in Lagos threw up the two oil companies.
Speaking at the event in Abuja, the Commission Chief Executive of the NUPRC, Gbenga Komolafe, explained that the deal was made possible by the fresh impetus given to the oil sector by President Bola Tinubu, especially his Executive Orders 40, 41 and 42 which essentially deal with fiscal incentives, local content, and cost efficiency as well as contract timelines.
But Komolafe insisted that every award has very clear terms about its tenure, maintaining that in compliance with current regulatory activities, unexplored acreages are expected to be relinquished in line with the Petroleum Industry Act (PIA).
The NUPRC chief executive disclosed that TotalEnergies with over 60 years operations in Nigeria hold 80 per cent contractor interest, and Sapetro with 30 years operations hold 20 per cent contractor interest.
The two offshore blocks, he said, span about 2,000 square kilometres in the prolific Niger Delta Basin, and were a direct product of the transparent, competitive, and reform-driven framework introduced under the PIA.
Stressing that the awardees of 2000 and 2001 licensees have become beneficiaries of the laudable initiatives and reforms of the President, Komolafe urged TotalEnergies and other potential investors to take advantage of the right regulatory, fiscal and governance regime as enthroned by the industry regulator.
Besides, he lauded the NNPC and contractors for their commitment in exploration and production activities in Nigeria, highlighting the successes already recorded in Egina, Akpo and other assets held or operated by the entities.
“This PSC signals the start of a committed work programme that will help us unlock the untapped geological potential of our deepwater, expand our reserves, boost production, and strengthen Nigeria’s energy security. It also affirms our broader vision to make Nigeria the premier destination for upstream investment in Africa,” he pointed out.
According to him, the new PSC framework sets out clear terms and conditions to guide the payment of a signature bonus as stipulated in the licensing round and production bonuses tied to commercial milestones, ensuring value to the federation.
Besides, he stated that the new template will ensure a defined minimum work programme, with the requirement to provide guarantees to assure performance and clear rules on cost recovery and profit oil sharing between the federation and contractors, in line with the fiscal provisions of the PIA and applicable laws.
In the same vein, he said the framework takes very seriously issues surrounding the payment of royalties and taxes, and strict compliance with the host community development obligations as well as provisions for the treatment of associated and non-associated gas and obligations relating to decommissioning and abandonment and environmental remediation fund.
He added: “We therefore count on your operational excellence, innovation, and environmental stewardship as you implement the agreed work programme. We also expect swift and technically sound exploration, leading to early Final Investment Decisions (FIDs).
“We further urge you to deepen local content, create quality jobs, empower Nigerian businesses, develop and produce the asset in line with decarbonisation principles and uphold the highest standards of sustainability, in line with the PIA’s host community provisions,” Komolafe pointed out.
Also speaking at the event, the Group Chief Executive Officer of NNPC, Bayo Ojulari, said the PSC is the first that comprehensively covers both crude oil and natural gas in its entire scope, describing it as a milestone.
Ojulari said that tapping non-associated gas in the deep water is one of the areas the industry needed to push the frontiers, highlighting the huge performance incentives, including a $10 million signature bonus, a production bonus of 2 million and 4 million barrels or a cash payment on attainment of 35 million barrels of production.
According to him, the deal brings the NNPC a notch closer to achieving the targets set for it by the president in the next five years.
“The PSC is a major milestone that speaks to the regulator’s commitment to implement the provisions of the PIA and will bring NNPC closer to achieving the target of 3 million barrels per day and additional investments of $60 billion by the end of 2030,” Ojulari said.
In his intervention, the Managing Director of TotalEnergies, Mr. Mathieu Bouyer, mentioned that the International Oil Company (IOC) would be the first of such entities to be awarded an exploration block in the last decade.
“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 exploration 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. 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,” he assured.
Also, the Managing Director of Sapetro, Mr. Chukwuemeke Anagbogu, expressed his confidence in the transparency of the process that led to the closeout ceremony.
“For Sapetro, these blocks are of strategic importance. As our current production assets have shown, these new assets provide a clear path to increasing our result base and assuring our longer term production growth. They represent a transformative step forward that will play a vital role in sustaining value creation for our shareholders, our stakeholders and the nation.
“As one of the pioneer indigenous companies in Nigeria’s deep water, Sapetro is deeply committed to strengthening our presence in the sector and contributing to its continued growth.
“By investing in these assets, we reaffirm our alignment with the government’s mission of responsible resource development, local content advancement and inclusive economic progress,” he stated.
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