FG signs $10m production sharing contract with TotalEnergies, Sapetro for offshore blocks

The Federal Government, through the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, has signed a Production Sharing Contract, PSC, with TotalEnergies and South Atlantic Petroleum, Sapetro, for Petroleum Prospecting Licences 2000 and 2001.

The licences, awarded in the 2024 licensing round, cover approximately 2,000 square kilometres in the Niger Delta Basin, with TotalEnergies holding an 80 per cent stake as operator and Sapetro holding 20 per cent.

The PSC includes a $10 million signature bonus and production bonuses of two million and four million barrels, or their cash equivalents, upon reaching output levels of 35 million and 100 million barrels. The agreement outlines clear terms on cost recovery, profit oil sharing, royalties, host community obligations, gas utilisation, decommissioning, and environmental remediation.

At the signing ceremony in Abuja, NUPRC CEO Gbenga Komolafe described the deal as a new chapter in Nigeria’s upstream oil and gas industry. He praised President Bola Tinubu for reforms, including 2024 executive orders on fiscal incentives, local content, and contract timelines, which he said boosted investor confidence.

Komolafe emphasized that the PSC provides a foundation for exploration and investment, unlocking untapped deepwater reserves, increasing production, and strengthening Nigeria’s energy security.

Nigerian National Petroleum Company Limited, NNPCL, CEO Bayo Ojulari highlighted that this is the first deepwater PSC awarded under the Petroleum Industry Act, PIA, and the first to comprehensively cover both crude oil and natural gas. He noted the contract’s performance-based incentives, including production bonuses and a cost recovery limit of 70 per cent, ensuring value for the Federation while rewarding contractors.

Ojulari said the PSC reflects the PIA’s provisions, promotes responsible offshore operations, and aims to advance Nigeria toward a production target of three million barrels per day.

TotalEnergies Country Chair Matthieu Bouyer reaffirmed the company’s long-term commitment to Nigeria, citing over 60 years of presence, employment of 1,800 people, and operating 400,000 barrels of oil equivalent per day in 2024. Bouyer pledged to implement the work program swiftly and responsibly, leveraging the company’s offshore expertise to deliver low-cost, low-emission developments.

He also highlighted TotalEnergies’ extensive downstream network of over 500 service stations and its commitment to generating value for Nigeria, including creating jobs and supporting local content.

The signing of the PSC is expected to attract new investments, enhance Nigeria’s oil and gas reserves, and contribute to making the country a premier destination for upstream investment in Africa.