Nigeria’s federal government, through the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), has executed a fresh oil deal with the duo of TotalEnergies and Sapetro.
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 Commission Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, 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. 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.
“Recall that the licensing round was based on a fair, transparent and competitive bidding process in line with Section 73 of the PIA. Hence the 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.
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.