• Signs PSC with TotalEnergies-Sapetro consortium

Sopuruchi Onwuka

The government has called on global upstream petroleum industry investment community to seize the advantage of the prevailing regulatory, fiscal and governance regime in seeking exploration licenses in the upcoming next bid round for oil block in the country.

Commission Chief Executive (CCE) of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, declared that new investments in the industry currently enjoy the full support of a determined and courageous government.

Oracle Intelligence reports that the NUPRC is the nation’s petroleum exploration license acreage administrator; and the agency has restated its commitment to conducting regular annual bid rounds for exploration blocks in the nations inland, continental shelf and deepwater sedimentary basins.

Engr Komolafe spoke while executing the details of official deed of Production Sharing Contracts (PSCs) on two offshore exploration permits awarded to a consortium of TotalEnergies and South Atlantic Petroleum (Sapetro) in the 2024 licensing round.

Between the partners in the PSC, TotalEnergies holds 80 percent operating interest while Sapetro has 20% non-operating stake in the offshore Petroleum Prospecting Licenses (PPL s) 2000 and PPL 2001 awarded by the NUPRC.

According to NUPRC, PPL s 2000 and 2001 cover an area of approximately 2,000 square kilometers in the prolific West Delta basin. The work program includes drilling one firm exploration well.

Senior Vice-President Exploration at TotalEnergies, Kevin McLachlan, said, “These promising block captures are fully aligned with our strategy of strengthening our Exploration portfolio with drill-ready and high impact prospects, which have the potential for low-cost and low-emissions developments from new discoveries in our core areas of expertise.”

Engr Komolafe stated that similar opportunities await investors that would participate in the next Licensing Round, stressing that “these licenses, awarded to TotalEnergies and its partner South Atlantic Petroleum (Sapetro) in the 2024 Licensing Round, mark a new chapter in our upstream oil and gas industry.”

He noted that government’s bold initiatives and reforms in the industry, “the 2024 Executive Orders #40 on fiscal incentives, #41 on local content, and #42 on cost efficiency and contract timelines, have catalyzed massive investment inflows for shared prosperity.”

Komolafe noted that the 2024 Licensing Round was based on a fair, transparent and competitive bidding process in line with Section 73 of the PIA.

He pointed out that the new PSC signals the start of a committed work programme that would help the country unlock untapped geological potential of the deepwater, expand reserves, boost production, and strengthen Nigeria’s energy security.

He said the NUPRC was working hand-in-hand with stakeholders and the acreage concessionaire to develop a new standardized PSC template that reflects the spirit and intent of the PIA; ensuring clarity, consistency, and fairness for the entire industry.

The PSC, he stated, sets out clear terms and conditions to guide this partnership; including payment of a signature bonus as stipulated in the licensing round and production bonuses tied to commercial milestones to ensure value to the country.

Engr Komolafe stated that the PSC defines a minimum work programme that guarantees performance; sets clear rules on cost recovery and profit oil sharing; stipulates payment of royalties, taxes and host community development obligations under the PIA.

Other terms, according to him, are provisions for the treatment of associated and non-associated gas to ensure optimal utilization, reduced flaring, and alignment with Nigeria’s gas commercialization agenda.

Next, he listed, are obligations relating to decommissioning and abandonment and Environmental Remediation Fund to ensure environmental protection, transparency and accountability.

These terms, according to him, provide certainty for investors, fairness for the ederation, and clarity for all parties.

To attract investors to the 2024 Licensing Round, he explained,  the Commission introduced minimum signature bonuses in line 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.”

He challenged TotalEnergies and Sapetro to deploy operational excellence, innovation, and environmental stewardship in driving agreed work programme.

“We also expect swift and technically sound exploration, leading to early Final Investment Decisions. We further urge you to deepen local content, create quality jobs, empower Nigerian businesses, develop & produce the asset in line with decarbonization principles and uphold the highest standards of sustainability, in line with the PIA’s host community provisions.

Engr Komolafe pledged the commitment of the NUPRC to enable, promote, and regulate the Nigerian upstream oil and gas sector in a transparent and accountable manner.

“We will continue to provide a level playing field, reduce uncertainty, and foster ease of doing business.”

He made it clear that the successful execution of the new PSC falls in alignment with the principles of the PIA, and reaffirms that Nigeria is open for business, ready for investment, and committed to leadership in the global energy space.