Home Oil & Gas NNPC targets $510m gas revenue in new deal with CNOOC, SAPETROL

NNPC targets $510m gas revenue in new deal with CNOOC, SAPETROL

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The Nigeria National Petroleum Corporation (NNPC) has entered into a new business deal that will resolve the issues around the OML 130 and help unlock substantial revenue in gas.

The corporation made this known in a statement it issued on its website and twitter handle on Saturday, August 8.

The statement noted that: “In its bid to meet the target of revving up production to  three million barrels per day and unlock gas revenues of about $225 million in the short term and  $510 million in the long run, the Nigerian National Petroleum Corporation (NNPC) has reached an accord 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.

Speaking at the signing of Head of Terms (HoT) agreement with the partners Thursday at the NNPC Towers, Abuja, the Group Managing Director of NNPC, Mallam Mele Kyari, said the deal was part of the Corporation’s PSC Dispute Resolution and Renewal Strategy of 2017 aimed at securing out of court settlement of all disputes around the 1993 Production Sharing Contracts (PSC) and agreeing on terms for their renewal.

A press release by the Corporation’s Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, explains that the dispute arose from recognition of certain cost and discordant interpretation of the fiscal terms of the PSC by NNPC and the Contractor parties. 

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,” Mallam Kyari stated. 

He commended CNOOC and SAPETROL for their understanding, while expressing delight that the HoT will facilitate the conclusion of all renewal issues. 

In his response, the Managing Director of CNOOC, Mr. Xie Vincent Wensheng, said the agreement has opened a new chapter in his company’s relationship with NNPC, stressing that it has provided a win-win situation for all parties.

On his part, Managing Director of SAPETROL, Mr. Toyin Adenuga, said the resolution of the dispute was a very important step towards further development of OML 130 and other new fields as the terms are now clearly spelt out. 

The execution of the HoT signals the resolution of a tax dispute that arose from the $2.3bn acquisition of a 45% 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 Ltd which holds 24% stake, while Petrobras Oil and Gas BV and SAPETRO hold 16% and 15% stakes respectively. 

The Nigerian National Petroleum Corporation (NNPC), said it has signed a Head of terms (HoT) agreement with China National Offshore Oil Corporation(CNOOC) and an indigenous oil production firm —South Atlantic Petroleum (SAPETRO).

A statement that was issued by the state-owned oil company via Twitter, yesterday, noted that this is part of the efforts that have been undertaken towards resolving all the disputes stemming from Oil Mining Lease (OML) 130 Production Sharing Contract.

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