The Nigerian National Petroleum Company Limited (NNPCL), in partnership with TotalEnergies and South Atlantic Petroleum (SAPETRO), has signed a new Production Sharing Contract (PSC) for Petroleum Prospecting Licences (PPLs) 2000 and 2001.
The agreement, executed under the supervision of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), marks a pivotal milestone in Nigeria’s deepwater exploration strategy and underscores the operationalisation of the Petroleum Industry Act (PIA).
A Decade-Defining Deal
This is the first major deepwater PSC involving an international oil company in more than 10 years. It consolidates TotalEnergies’ 80% contractor interest alongside SAPETRO’s 20% equity stake, while NNPCL acts as concessionaire. The PSC uniquely integrates crude oil and non-associated gas development, reflecting the regulator’s push to monetise gas and bolster Nigeria’s energy transition agenda.
NUPRC Chief Executive Engr. Gbenga Komolafe noted that the contract aligns with President Bola Ahmed Tinubu’s 2024 Executive Orders on fiscal incentives, local content, and contract efficiency. He said the deal “signals the start of a committed work programme to unlock untapped geological potential, expand reserves, and enhance Nigeria’s energy security.”
Terms and Incentives
The PSC framework includes:
- A $10 million signature bonus.
- Production bonuses tied to milestones at 2m and 4m barrels or a cash trigger at 35m barrels.
- Clear obligations on Decommissioning and Abandonment (D&A) and the Environmental Remediation Fund (ERF).
- A defined minimum work programme backed by financial guarantees.
According to Komolafe, unexplored acreages will be relinquished if operators fail to meet obligations, ensuring compliance with PIA provisions.
Industry Leaders React
NNPCL’s Group Chief Executive Officer, Bashir Bayo Ojulari, described the deal as “a major milestone” and the first PSC that fully covers both oil and gas. He linked it directly to NNPCL’s target of 3 million barrels per day (bpd) and $60 billion new investments by 2030.
TotalEnergies’ Managing Director, Mathieu Bouyer, stressed the company’s long-standing commitment to Nigeria, calling the PSC “the formal beginning of another chapter of value creation” after a transparent 2024 Licensing Round. SAPETRO’s MD, Chukwuemeke Anagbogu, praised the regulator for “a completely free and transparent process.”
Why It Matters
The PSC is strategically significant because it:
- Reopens Nigeria’s deepwater sector to global capital after a decade-long lull.
- Prioritises gas monetisation, in line with global decarbonisation pressures.
- Reinforces energy security by expanding reserves and supply.
- Could unlock up to $60 billion in fresh investments by 2030.
- Strengthens government revenue through bonuses, royalties, and taxes.
- Supports local content and job creation through mandatory domestic participation.
Outlook
Analysts say the agreement reflects a regulatory environment increasingly aligned with investor confidence under the PIA. With work programmes expected to commence immediately, industry stakeholders will closely watch how swiftly exploration transitions into first oil and gas from these blocks.
As Nigeria pushes to reposition itself as Africa’s deepwater investment hub, this PSC may well become the benchmark for future offshore deals.