The Nigerian National Petroleum Commission (NNPC) Limited says it has renewed the agreement of five Oil Mining Leases after resolving a 30-year-old conflict with its partners over oil production sharing contracts.
The Production Sharing Contracts involve deals between Oil Exploration and Production (E&P) firms and the government concerning how much of the resource extracted from the country each will receive.
According to NNPC, the parties renewed their agreements in five oil mining leases (OMLs), including 128, 130,132, 133, and 138, in a signing ceremony held in Abuja on Friday.
The development is expected to unlock over $500 billion in revenue for the country.
The PSCs were first introduced in 1993 and their renewal has since been stalled by disputes.
Speaking at the event, Mele Kyari, group chief executive officer (GCEO), NNPC Limited, said the new contract would end the litigation issues surrounding the 1993 PSCs.
TheCable, in a report, quoted the NNPC boss to have said, “a major issue for all of us is all forms of litigations”.
“As you do this, it damages relationships and more than anything else, it stifles investment. That is why exactly that situation was brought to the table, that except for one asset, practically did crude oil enter into any new commitment, since 2007,” he said.
“This is clearly related to the disputes around the 1993 PSC, and we knew that as the JIA process was going on the process to put the Petroleum Industry Act, it was very obvious that the resolution or the dispute of the 1993 PSC is a critical part of that bargain.
“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 the competitive benefits that they must have from their investments.
“In the end, the PIA recognises 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 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.”
He said a 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 recognised 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 the contacts,” he said.
“Over a long period of time, a massive team was put together by all of us, and I must congratulate them. Very tedious work was done by our collective teams leading to the agreement.”