The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has signed a Production Sharing Contract (PSC) with NNPC Limited and the TotalEnergies-Sapetro Consortium for Petroleum Prospecting Licences 2000 and 2001. According to NUPRC Chief Executive, Gbenga Komolafe, the agreement marks a significant milestone in Nigeria’s upstream sector, aligning with the Petroleum Industry Act (PIA).
The licences, awarded to TotalEnergies and its partner South Atlantic Petroleum (Sapetro) under the 2024 Licensing Round, signify the formal conclusion of the round. The PSC aims to unlock deepwater geological potential, expand reserves, boost production, and enhance Nigeria’s energy security. Komolafe commended President Bola Tinubu for his bold reforms, which have catalysed significant investment inflows and set the stage for shared prosperity.
The 2024 Executive Orders, particularly those on fiscal incentives, local content, and cost efficiency, have had a positive impact on the sector. The Awardees of the 2000 and 2001 licences have become beneficiaries of these initiatives and reforms. Komolafe urged TotalEnergies and other potential investors to take advantage of the favourable regulatory, fiscal, and governance regime in Nigeria.
The Licensing Round was based on a fair, transparent, and competitive bidding process, as outlined in Section 73 of the PIA. The award of the two offshore blocks, spanning approximately 2,000 square kilometres in the Niger Delta Basin, is a direct result of this framework. The NUPRC developed a new standardised PSC template that reflects the spirit and intent of the PIA, in collaboration with stakeholders, including NNPC Limited.
The PSC is unique in that it comprehensively covers both crude oil and natural gas, with robust gas terms, including a profit gas split that incentivises monetisation of non-associated gas. The agreement includes a signature bonus of $10 million, production bonuses, and cash equivalents for attainment of certain production milestones. This development is expected to bring NNPC Limited closer to achieving its target of three million barrels per day and an additional investment of $60 billion by 2030.
The Managing Director of TotalEnergies, Mathieu Bouyer, thanked NUPRC for its work in ensuring a transparent bid process and extensive deliberations. TotalEnergies is eager to progress swiftly and responsibly with the implementation of the agreed work programme for both blocks. The signing of the PSC marks a new chapter in Nigeria’s oil and gas upstream sector, with the potential to unlock significant investment and growth opportunities.
