1
Anthony Ufoh
The Federal Government of Nigeria has signed a production sharing oil contract with TotalEnergies and South Atlantic Petroleum for the Petroleum Prospecting Licences 2000 and 2001.
TotalEnergies will hold about 80 per cent interest as operator while Sapetro will take a 0 per cent interest in the deal. The blocks, awarded in the 2024 licensing round, cover about 2,000 square kilometres in the Niger Delta Basin.
The fiscal package features a $10 million signature bonus, alongside production bonuses of two million barrels and four million barrels, or their cash equivalents, upon achieving output levels of 35 million and 100 million barrels, respectively.
Gbenga Komolafe, speaking for the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the consortium that involves the Nigerian National Petroleum Company (NNPC), said that the deal marks “a new chapter” in Nigeria’s upstream oil and gas industry.
This development follows the commission’s move last month to unlock an additional 810,000 barrels per day from Nigeria’s deepwater fields through its new cluster and nodal development initiative.
Komolafe said the PSC provides clarity on cost recovery, profit oil sharing, royalties, and host community obligations in line with the Petroleum Industry Act. It also includes terms on gas utilisation, decommissioning, and environmental remediation.
He said, “Today is not just about signing documents. It is about laying the foundation for new exploration and investment. 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.
“Importantly, the PSC sets out clear terms and conditions to guide this partnership. These include the payment of a signature bonus as stipulated in the licensing round and production bonuses tied to commercial milestones, ensuring value to the Federation; A defined minimum work programme, with the requirement to provide guarantees to assure performance.
“Of course, this journey was not without challenges. Attracting investors to the 2024 Licensing Round was not easy. But with the approval of Mr. President, the Commission adopted a pragmatic solution introducing minimum signature bonuses as consideration for asset awards. This approach aligned Nigeria with international best practice, where countries like Thailand, Israel, Guyana, and Brazil have moved away from heavy, front-loaded bonuses towards minimal or no signature bonuses to attract investment.”
Komolafe added that the commission has implicit confidence in TotalEnergies and its partners to fulfil the terms within the allowed windows for mutual benefits to Nigeria.
Also speaking at the event, the group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Bayo Ojulari, described the contract as “unique,” noting that it is the first deepwater PSC awarded since the PIA and the first to comprehensively include crude oil and natural gas terms.
Highlighting key contractual terms, Ojulari said the agreement includes performance-based incentives such as a $10 million signature bonus and production bonuses tied to output milestones, with a cost recovery limit set at 70 per cent. “This particular PSC is unique in many respects, and I just want to highlight a few. It is the first in the deep water offshore PSC following the successful completion of the 2024 licensing round.
“It is the first PSC that comprehensively covers in scope both crude oil and natural gas. It is the first PSC with robust gas terms, including a profit gas split that incentivises monetisation of non-associated gas. As you know, the whole non-associated gas in the deep water is one of the critical areas that we need to really push the frontiers in Nigeria.
He continued, “We are very proud of that achievement. The PSC is properly framed to reflect the nuances of the PIA, the robust multifaceted role of the Commission, the governance and oversight of the concessionaire, and the obligations of the contractor to conduct offshore petroleum operations in a responsible manner with guidance and significant value delivery to the Federation.
“The PSC has robust fiscal terms. One, a signature bonus of $10 million, production bonus of two million barrels, and four million or cash equivalent on attainment of 35 million barrels and 100 million barrels production respectively. So there is an incentive for performance, which we think is very significant. These terms enhance the Federation’s stake while ensuring a good return on investment to the contractor. This PSC is an attempt to address the gap of the past with a document that is reflective of the PIA, resilient, and complete. It will help us move closer to the target of three million barrels per day and attract new investments,” he explained.
The Country Chair of TotalEnergies in Nigeria, Matthieu Bouyer, reaffirmed the company’s deep and enduring commitment to Nigeria. “Today marks the formal beginning of what we hope will be a new chapter of value creation in Nigeria’s upstream sector,” he said.
He said, “TotalEnergies has been present in Nigeria for over 60 years, employing over 1,800 people and contributing significantly to the country’s energy production, operating over 400,000 barrels per day of oil equivalent in 2024. We are eager to progress swiftly and responsibly with the implementation of the agreed work program for those blocks.”
The company plans to leverage its core areas of expertise and long-standing experience in Nigeria’s offshore domain to deliver low-cost and low-emissions developments. The signing of the PSC is expected to contribute to Nigeria’s goal of achieving 3 million barrels per day and attracting additional investment.
TotalEnergies’ commitment to Nigeria is further demonstrated by its extensive downstream network with over 500 service stations. “We are determined to deliver results that will benefit all stakeholders, also reinforcing Nigeria’s content-creating job and leveraging this entry to generate value for the country and its people,” Bouyer concluded.
The NUPRC further emphasised that the PSC aligns its vision with making Nigeria the premier destination for upstream investment in Africa.
Read the full article here
