The Nigerian National Petroleum Corporation (NNPC) yesterday said it had reached an agreement with its partners, China National Offshore Oil Company (CNOOC) and South Atlantic Petroleum (SAPETROL), to settle all outstanding issues surrounding the development of Oil Mining Lease (OML) 130. The corporation stated that the move was part of efforts to meet the target of three million barrels of crude oil output per day and unlock gas revenues to the tune of about $225 million in the short term, and $510 million in the long run.
Speaking at the signing of the Head of Terms (HoT) agreement with the partners at the NNPC Towers, Abuja, Group Managing Director of NNPC, Mr Mele Kyari, said the deal was in line with the corporation’s PSC Dispute Resolution and Renewal Strategy of 2017. Kyari said with the arrangement, an out of court settlement of all disputes around the 1993 Production Sharing Contracts (PSC) and agreement on terms for their renewal had now been sealed.
A press release by NNPC’s Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, explained that the dispute had arisen from recognition of certain “cost and discordant” interpretation of the fiscal terms of the PSC by NNPC and the contracting parties.
Kyari stated, “With the resolution and signing of the Head of Terms (HoT) document, which sets out the terms agreed in principle between parties in the course of negotiations, apart from unlocking over $225 million of gas revenues, it will also enable settlement of renewal fees and create an environment conducive to further development of OML 130 with associated benefits to the federation.
“We are doing this with every other partner in the PSC dispute, we believe that we can close this engagement and conversation with all of you. The HoT will clearly enable us to proceed and have a full settlement, and this will benefit all of us.”
He commended CNOOC and SAPETROL for their understanding, while expressing delight that the HoT would facilitate the conclusion of all renewal issues.
In his response, Managing Director of CNOOC, Mr. Xie Vincent Wensheng, said the agreement had opened a new chapter in his company’s relationship with NNPC. Wensheng said the deal was a win-win situation for all parties.
On his part, Managing Director of SAPETROL, Mr. Toyin Adenuga, said the resolution of the dispute was an important step towards further development of OML 130 and other new fields, as the terms were now clearly spelt out.
The NNPC statement said the execution of the HoT signalled the resolution of a tax dispute that arose from the $2.3 billion acquisition of 45 per cent stake in OML 130 by CNNOC from SAPETRO in 2006.
The OML 130 consists of the Akpo and Egina Fields, which have been producing since 2009 and 2018, respectively. It is operated by Total Upstream Nigeria Limited, which holds 24 per cent stake, while Petrobras Oil and Gas BV and SAPETRO hold 16 per cent and 15 per cent stakes, respectively.