The Nigerian National Petroleum Corporation NNPC has renewed Oil Mining Lease 118 with the local subsidiaries of Shell RDSa.L, Total TOTF.PA, Exxon XOM.N and Eni ENI.MI for another 20 years.
According to a statement released by the NNPC on Tuesday, the deal signals the end of “long-standing disputes over the interpretation of the fiscal terms of the production-sharing contracts” between the investors in the field”.
The Nigerian government will immediately recognise revenues of $780 million from the signing of the agreement, “while it would also free the parties from over $9 billion in contingent liabilities,” the statement said.
NNPC described the agreement as a “watershed” in how it would administer deepwater operations in Nigeria. More than $10 billion of investments will “be unlocked as a result of this development”, it said.
NNPC head Mele Kyari noted there were benefits to the deal beyond paving the way for new projects.
It provides “immediate income for government in the excess of $780 million, opportunity to resolve long-standing dispute with contingent liabilities of $9 billion for all of us and ultimately seeing growth in our country where investments will come in to assets. This country is ready for business and we’re very grateful.”
In particular, it said, the agreement settles a long-standing dispute on the production-sharing contract (PSC). The agreement starts a “new PSC with clearly aligned terms”, NNPC said.
The new PSC will run for 20 years.