Nigeria’s NNPC signs deals to renew OML 118
Join Our Newsletter - Get important industry news and analysis sent to your inbox – sign up to our e-Newsletter here
X

Nigeria’s NNPC signs deals to renew OML 118

26 May 2021 (Last Updated May 26th, 2021 15:49)

Nigerian state oil firm NNPC has entered five agreements with Production Sharing Contract partners to renew OML 118.

Nigeria’s NNPC signs deals to renew OML 118
NNPC has renewed the OML 118 for an additional 20 years. Credit: Charlie Hang on Unsplash.

The Nigerian National Petroleum Corporation (NNPC) has signed agreements with the local subsidiaries of Shell, Total, Exxon and Eni, to renew the Oil Mining Lease (OML) 118 for an additional 20 years.

A total of five agreements have been signed between NNPC and the OML 118 partners. These include dispute settlement agreement, settlement agreement, historical gas agreement, escrow agreement and renewed production sharing contract (PSC) agreement.

Reuters reported NNPC as saying that the deal marks an end to the ‘long-standing disputes over the interpretation of the fiscal terms of the production-sharing contracts’ between the partners in the field.

NNPC group managing director Mele Kyari said that the more than $10bn of investment would be ‘unlocked as a result of the agreements, which signalled the end of the longstanding 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 deepwater assets in Nigeria’.

OML 118 includes the Bonga deepwater oil field, which lies 120km south-west of the Niger Delta, in a water depth of more than 1,000m.

It commenced production in November 2005 and is the first deepwater oil field in Nigeria.

It has a production capacity of around 200,000 barrels of oil per day and 150 million standard cubic feet of gas per day.

Kyari said that the PSC deal is expected to yield immediate revenue of more than $780m to the Nigerian Government. It would also free the parties from contingent liabilities of more than $9bn.

Bloomberg reported Shell spokesman as saying: “Through these agreements, stakeholders will have clear and stable set of terms incentivising further development of the OML 118 block and opening further opportunities in the prolific Nigerian deepwater oil and gas industry.”