TheCable

The Nigerian National Petroleum Corporation (NNPC) says it has signed an agreement with its partners in the oil mining lease (OML 130) production sharing agreements (PSA) and production sharing contract (PSC) to unlock $760 million in gas revenue.

OML 130 is a deepwater block located 130kilometres offshore Niger Delta at water depths of well over 1000metres. The block contains the producing Akpo and Egina fields and Preowei discovery.

It was formerly known as oil prospecting license (OPL) 246, the asset was awarded in 1998 to SAPETRO and was later converted to OML 130 in February 2005 after commercial discovery of oil in Akpo and Egina in 2000 and 2003 respectively

The partners include Total Exploration and Production Nigeria (TEPNG), China National Offshore Oil Corporation (CNOOC), South Atlantic Petroleum Nigeria Limited (SAPETRO), and Prime 130 Limited.

In a statement by Kennie Obateru, spokesperson of NNPC, the corporation said the fresh gas supply purchase agreements (GSPAs) and gas entitlement agreements (GEA) under the commercialisation programme were executed on Thursday NNPC Towers.

According to the statement, the sale structure is designed to provide a clear delineation for allocating the gas sale proceeds to all the participating parties, including midstream handling and transportation.

Mele Kyari, group managing director (GMD) of the Nigerian National Petroleum Corporation (NNPC), said the agreements have also opened up an opportunity to have the dispute settlement agreement for the OML 130 PSC.

“This a very proud moment for all of us. I understand all the delays, they are completely unavoidable. It is desirable for us to have the full alignment of all parties before we proceed,” he said.

“The end result is that there would be clarity around our relationship and we would be unlocking resources that have been on the table for many years.”

“We now have a clear line of sight around gas revenue of up to $250 million, and also another $510 million that is applicable to the rest of us.”

He noted that apart from the revenue boost, the agreement ultimately means there would be a renewed production sharing contract to guide the relationship in the future.

On the recently passed Petroleum Industry Bill, the GMD assured the parties that the fiscal terms proposed in the oil reform legislation remain some of the most attractive in the global oil and gas industry, noting that investors have no cause to worry.

In his part, Mike Sangster, managing director of TEPNG, expressed delight at signing the agreements, adding that the parties were committed to the terms of the agreements.

Sangster commended NNPC management for their vigorous pursuit of the aspiration of the decade of gas programme of the federal government.

At the conversion of the OPL to OML 130 in April 2005, NNPC said the federal government exercised its rights as concessionaire of 50 percent in the interest. The remaining 50 percent were for other partners.

“In April 2006, SAPETRO farmed out 90% of its Contractor interest in the OML 130 PSC to CNOOC, the statement added.

“The remaining reserves on the block are estimated at one billion barrels of liquids and over 1.2trillion cubic feet of natural gas.

“Gas from the block was transported and sold to the Nigeria Liquefied Natural Gas, NLNG, via the Akpo-Amenam Gas Pipeline and was funded in kind by the PSC under the Gas Utilization Agreements, GUAs, for consideration of 1TCF of gas which was achieved in July 2018, thus terminating the GUA.

“It was projected that the parties would agree on the post- 1TCF regime for the monetization of the gas upon the expiration of the GUA. However, due to underlying disputes on the PSC and other reasons, the post-1TCF regime was never agreed upon.”

The corporation said the new pacts offer gas sales framework for the 100 percent volume under the PSC and the PSA