The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has successfully concluded a landmark Production Sharing Contract (PSC) agreement with the TotalEnergies-SAPETRO consortium, marking the first international oil company exploration block award in Nigeria in over a decade.
The signing ceremony, held at the NUPRC headquarters in Abuja on Monday, formalised the award of Petroleum Prospecting Licences (PPL) 2000 and 2001 to TotalEnergies and its partner South Atlantic Petroleum (SAPETRO). This agreement represents the culmination of the 2024 Licensing Round and signals a new era for Nigeria’s upstream oil and gas sector.
NUPRC Chief Executive Engineer Gbenga Komolafe highlighted how President Bola Ahmed Tinubu’s 2024 Executive Orders have catalysed this major investment. The three key orders – Executive Order #40 on fiscal incentives, #41 on local content, and #42 on cost efficiency and contract timelines – have created an enabling environment for massive investment inflows.
“This deal marks a new chapter in Nigeria’s upstream oil and gas industry,” Komolafe stated during the ceremony. “The awardees of PPL 2000 and PPL 2001 are direct beneficiaries of President Tinubu’s comprehensive reforms.”
The licensing round was conducted through a fair, transparent, and competitive bidding process in accordance with Section 73 of the Petroleum Industry Act (PIA). Komolafe commended President Tinubu for eliminating entry barriers that had previously hindered international investment in Nigeria’s oil sector.
Under the new agreement, TotalEnergies holds an 80% contractor interest, leveraging its over 60 years of operations in Nigeria, while SAPETRO maintains a 20% stake with its 30 years of local experience. The partnership represents a strategic blend of international expertise and local knowledge.
The PSC includes several significant financial commitments:
- A $10 million signature bonus
- Production bonuses of $2 million and $4 million tied to specific barrel milestones
- Cash payments upon reaching 35 million barrels of production
- Comprehensive decommissioning and environmental remediation fund obligations
Nigerian National Petroleum Company Ltd (NNPCL) Group CEO Bashir Bayo Ojulari emphasized the unique nature of this PSC, noting it’s the first to comprehensively cover both crude oil and natural gas exploration. This aligns with the industry’s push to tap non-associated gas reserves in deep-water areas.
“The PSC is a major milestone that brings NNPCL closer to achieving our target of three million barrels per day and additional investments of $60 billion by the end of 2030,” Ojulari explained.
TotalEnergies Managing Director Mathieu Bouyer expressed honor at being the first international oil company awarded an exploration block in Nigeria in a decade. The company is committed to progressing swiftly with the agreed work program and aims to spud the first well in the shortest possible timeframe.
“Today marks the formal beginning of what we hope will be another chapter of value creation in Nigeria’s upstream sector,” Bouyer stated.
This agreement is expected to unlock Nigeria’s untapped geological potential in deep-water areas, expand reserves, boost production, and strengthen the country’s energy security. The deal demonstrates Nigeria’s renewed attractiveness as an investment destination following comprehensive regulatory reforms.
SAPETRO Managing Director Chukwuemeke Anagbogu praised the transparency of the entire process, highlighting NUPRC’s effective leadership throughout the licensing round.
The successful completion of this licensing round sets the stage for future bidding opportunities, with NNPCL expressing eagerness for additional rounds. This development is expected to attract more international investors to Nigeria’s oil and gas sector, potentially transforming the country’s energy landscape.
The agreement represents not just a commercial success but a testament to Nigeria’s commitment to creating a business-friendly environment for international oil companies while ensuring local participation and content development.
Seunmanuel Faleye is a brand and communications strategist. He is a covert writer and an overt creative head. He publishes Apple’s Bite International Magazine.