OML 118: NNPC signs deep-water agreement to unlock $10bn investments

OML 118

OML 118: NNPC signs deep-water agreement to unlock $10bn investments



The Nigerian National Petroleum Corporation (NNPC) and its Production Sharing Contract partners have executed five agreements to renew Oil Mining Lease 118 (OML 118) for another 20 years.

The agreements has the potential to unlock fresh investments valued above $10 billion.

NNPC outlined the partners as Shell Nigeria Exploration and Production Company, Total Exploration and Production Nigeria Limited, Esso Exploration and Production Nigeria Limited and Nigerian Agip Exploration.

The five agreements signed were the Dispute Settlement Agreement, Settlement Agreement, Historical Gas Agreement, Escrow Agreement and Renewed PSC Agreement.

A statement by the Group General Manager, Group Public Affairs Division, NNPC, Dr Kennie Obateru, quoted the Group Managing Director of the corporation, Mele Kyari, as saying that over $10 billion of investment would be unlocked as a result of the agreements.

This, according to Kyari, signaled the end of the long-standing disputes over the interpretation of the fiscal terms of the Production Sharing Contracts and the emplacement of a clear and fair framework for the development of the huge deep-water assets in Nigeria.

He said, “This is an indication of a renewed confidence between the NNPC and her partners; between the government and the investing communities which include NNPC.

“It produces value for all of us by providing a clear line of sight for investment in the Bonga bloc of around $10 billion.”

He disclosed that the deal would yield over $780 million in immediate revenues to the Federal Government, while it would also free the parties from over $9 billion in contingent liabilities.

“Ultimately, these agreements will engender growth in our country where investment will come in for other assets, not just in the deep-water, but even for new investors.”

He added, “It is an opportunity for them to see that this country is ready for business.”

The Country Chair of Shell Companies in Nigeria, Osagie Osunbor, said the OML 118 renewal agreement would remain a watershed in the history of deep-water investments in Nigeria.

He assured partners in the deal that the giant stride would further bolster investor confidence in the country.

The Managing Director, SNEPCo, Mr Bayo Ojulari, said the agreements marked the end of a 12-year dispute that had marred business relationship and affected trust and investment.

“Today, we have signed agreements that define the future of deep-water for Nigeria. This is the first deep-water block that was developed in Nigeria and it is also the first one that we are resolving all the disputes that will lay the foundation for the resolution of other PSCs,” he said.

The Managing Directors of Total, Mike Sangster; Exxonmobil, Richard Laing; and NAOC, Roberto Danielle, said the agreements would attract more investments into the Nigerian oil and gas industry.