Stakeholders target $500bn revenue as FG renews OMLs for 20yrs

The Federal Government yesterday renewed for another 20 years the Oil Mining Leases, OML, for OML 125, 130,133, 132, 138, with the NNPC Limited and its partners signing a revised Production Sharing Contracts, for the fields.


The renewal of the OMLs is expected to produce about 10 billion barrels of crude oil and generate about $500 billion in revenues for all the entities involved.

Located in Nigeria’s deep waters, the OMLs include blocks in Agbami, Bonga, Erha, Apo and Egina with companies such as SNEPCO, Chevron, Texaco, ESSO, Sinok, as partners to NNPC Limited.

Speaking at the PSC and Dispute Settlement Agreement, DSA, signing ceremony in Abuja, the Group Chief Executive Officer of NNPC Limited, Mallam Mele Kyari said the contract signing brought clarity to the deals which were first signed in 1993.

Kyari admitted that while there have been disputes concerning the PSCs for the OMLs in the past, the new agreements reached in line with the provisions of the Petroleum Industry Act, PIA 2021, ensure better clarity and process for dispute resolutions.

According to him, “We all know that in businesses, disputes are inevitable. Disagreements always come when there’s no clarity of understanding of the agreements that businesses go into and very often this is also complicated by laws that may not carry the necessary clarity that is required for businesses to go into contracts. And that’s how we landed in the 1993 PSCs debacle since 2007. This conflict has been raging and misunderstanding has become a major issue for all of us in the space leading to arbitration and all forms of litigation.

“And of course, as you do this, it does two things; it damages relationships, and more than anything it stifles investment. That’s exactly what that situation brought on the table, except for one asset, that we practically could not enter into any new commitment since 2007.

“This is clearly related to the disputes around 1993 PSCs and we knew that as the PIA process was going on it was very obvious that the resolution of a dispute over the 1993 PSCs is a critical part of that bargain.

“And today we are happy our country kept its promise. And I understand very clearly that it will not have been possible, except you have some courage and leadership. And all of us must give this credit to President Buhari who agreed that we must resolve this in the most amicable manner.

“In a manner that the county benefits and also in a way that investors get to recover their costs and make the competitive benefits that they must have from their investments. At the end, the PIA recognized all those terms, the fiscal terms that clearly re-engineer to make sure that these conditions are met. And it also allowed us by law to close our disputes in an amicable manner so that we stop all litigation so that there are terms and conditions that will enable us to move forward with our relationship”, he added.

Giving a breakdown of the potential benefits of the OML renewals, the Group General Manager, National Petroleum Investment Management Services, NAPIMS, Engr. Bala Wunti said the deals will lead to $5 billion in foreign direct investments.

He stated: “Today, we are at the verge of making history, the history to resolve all pending disputes in our PSCs with a potential to develop and monetize over 10 billion bbls and potentially generate revenue in excess US$500 billion to stakeholders and attainment of energy security for the country”.

Wunti explained that “since its introduction of the PSC into Nigeria’s hydrocarbon production algorithm, over 5.9 billion barrels of oil equivalent has so far been produced and monetized by the various PSCs arrangements. Over the last two decades, The PSCs have commutatively accounted for about 40 percent of Nigeria’s oil production”.

New move to combat oil theft

Also at the event, NNPC Limited unveiled a new control centre and online platform that would help the industry tackle the issue of pipeline vandalism and oil theft that cost Nigeria over $10 billion in 2022 alone.

Mallam Kyari explained that the government was tackling the menace headlong and assured industry operators that oil produced would be successfully evacuated.

“We have put up a very robust framework of ensuring that we contain these menaces and we’re already seeing the results. Needless to say, that they’re still ongoing activities of vandals on our pipelines of oil and assets. This is very visible in the forms of illegal refineries that are continuously put up in some locations and also insertions into our pipeline but we are reacting to it”.

He said the Nigerian government would take action against foreign refineries which buy crude oil stolen from Nigeria, stressing that every crude oil from Nigeria has a registered mark and identification.

The new platform, NNPC Limited, enables individuals to report cases of suspected pipeline vandalism or oil theft for immediate action.