TotalEnergies and South Atlantic Petroleum (Sapetro) on Monday signed a Production Sharing Contract (PSC) for two offshore blocks, spanning about 2,000 square kilometres in the Niger Delta Basin.

The PSC covering petroleum prospecting licences 2000 and 2001 was awarded to TotalEnergies Sapetro in the 2024 licensing round.

According to Gbenga Komolafe, Commission Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), who spoke during the signing ceremony in Abuja, the PSC signals the nation’s commitment to unlock its untapped deepwater assets, expand reserves, boost production, and strengthen its energy security.

He explained that to attract investors to the 2024 licensing round, the Commission introduced the minimum signature bonuses as consideration for asset awards. This approach, he said, 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.

He said, “Permit me to congratulate TotalEnergies with over 60 years of operations in Nigeria and holding 80 peper contractor interest, as well as Sapetro with 30 years of operations and holding 20 peper contractor interest, on your success in the licensing round.

“Recall that the licensing round was based on a fair, transparent and competitive bidding process in line with Section 73 of the PIA. Hence t, he award of these two offshore blocks, spanning about 2,000 square kilometres in the prolific Niger Delta Basin, is a direct product of the transparent, competitive, and reform-driven framework introduced under the Petroleum Industry.

He explained that the Commission, working hand-in-hand with stakeholders, especially NNPC Limited as the concessionaire, has developed a new standardised PSC template to reflect the intent of the PIA, ensuring clarity, consistency, and fairness for the entire industry.

The terms of the PSC, as explained by Komolafe, 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; 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.

Others include: payment of royalties and taxes, and strict compliance with the host community development obligations under the PIA; provisions for the treatment of associated and non-associated gas, to ensure optimal utilisation, reduced flaring, and alignment with Nigeria’s gas commercialisation agenda; and obligations relating to decommissioning and abandonment and environmental remediation fund, to ensure environmental protection, transparency and accountability.

“These terms provide certainty for investors, fairness for the Federation, and clarity for all parties. We have implicit confidence in TotalEnergies and partners to fulfil these terms within allowed windows for mutual benefits to the Nigerian federation and Total as a corporate entity.

“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 decarbonisation principles and uphold the highest standards of sustainability, in line with the PIA’s host community provisions,” he added.

In his remarks, Bashir Ojulari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, noted that the PSC was the first in the deepwater offshore following the successful completion of the 2024 licensing round. He added that it covers in scope both crude oil and natural gas.

The PSC, according to Ojulari, is the first contract with robust gas terms, including a profit gas split that incentivises monetisation of non-associated gas. “So this is quite front leaning from, as you know following the PIA, the whole non-associated gas in the deep water is one of the critical areas that we needed to really push the frontiers in Nigeria. So we’re very proud for that achievement.”

He explained that the PSC has robust fiscal terms, including: a signature bonus of $10 million, a production bonus of 2 million barrels and 4 million or cash equivalent on attainment of 35 million barrels and 100 million barrels production.

Other terms, according to Ojulari, include: crude profit oil split based on cumulative production, gas profit split based on cumulative associated gas sales, not just production; cost per limit of 70 per cent production bonuses, applicable royalty rates and clearly defined recoverables and non-recoverable costs.

“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 not only reflective of the PIA but is resilient and complete. We make sure there are no gaps. The PSC is a major milestone that speaks to the regulator’s commitment to implementing the provision of the PIA and will no doubt bring NNPC Limited closer to achieving the target of 3 million barrels per day and an additional investment of $60 billion by 2030,” he said.

Also speaking, Matthieu BOUYER, managing director, TotalEnergies Upstream Companies, stated that Nigeria, under the leadership of President Bola Tinubu, is setting the right conditions to attract investors in Nigeria.

He said that the blocks are fully aligned with the company’s exploration strategy focused on strengthening its portfolio with drill-ready, high-impact prospects.

“This moment comes after an open bid process and transparent bid process completed in December 2024. We are honoured that Total Energies and Tapetro are the first International companies to be awarded an exploration block in over 10 years, in that our joint bid with Sapetro was successful.

“We believe these opportunities have the potential to deliver low-cost and low-emissions developments leveraging our core areas of expertise and our long-standing experience of Nigeria’s offshore domain. We are eager to progress swiftly and responsibly with the implementation of the agreed work program for those blocks,” he said.

In his remarks, Chukwuemeke Anagbogu, Managing Director, South Atlantic Petroleum (Sapetro) said that as the company’s current production assets mature, these new assets provide a clear path to increasing its reserve base and assuring our longer-term production growth.

“They represent a transformative step forward and will play a vital role in obtaining value creation for our shareholders, our stakeholders, and the nation. In the broader national context, Nigeria remains a vital actor in the global energy mix.

“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.” (BusinessDay)

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