The Nigeria National Petroleum Company Limited, NNPCL says it has renewed oil production sharing contracts (PSCs) with its partners, after about thirty years. The company also said it has resolved the lingering disputes with its PSCs contractors.
What is this deal about?
Production Sharing Contracts are contracts between E&P and the government concerning how much of the resources extracted from the country each will receive. The PSCs were first introduced in Nigeria in 1993, but their renewal has since been stalled by disputes. Its development is expected to unlock over 500 billion dollars in revenue for the country.
According to NNPCL, the parties renewed their agreement on five oil mining leases including OML 128, OML 130, OML 132, OML 133, and OML 138, in a signing ceremony held in Abuja. The deal is also expected to boost oil production and provide more than 30 billion dollars in foreign direct investment.
What is NNPC saying about the deal?
Speaking at the signing ceremony, the Group Chief Executive Officer of NNPC Limited, Mele Kyari, said the new contract would end the litigation issues surrounding the 1993 PSCs. In his words:
“Today we are happy. Our country kept its promise, and I understand very clearly that it would not have been possible except you had some courage of leadership, and all of us must give this credit to President Muhammadu Buhari, who agreed that we must resolve this most amicably, in a manner that benefits the country but also in a way investors recover their cost and make competitive benefits that they must have from their investment.
“In the end, the Petroleum Industry Act recognizes all those terms. The fiscal terms are re-engineered to make sure that these terms are met and also allowed us by law to close our disputes amicably so that we can stop all litigations so that some terms and conditions will enable us to move forward with our relationship and that is why we are here today.”
Kyari also said the major impact of the new agreement was that there would be clearer relationships between the parties. “We will have clearer agreements in a new PSC that must have recognized all issues that we have in the 1993 PSCs, and those clarities are there. All ambiguities have been reduced to a minimum. Of course, you can never take out ambiguities from contracts,” he said.