TotalEnergies SE said on Monday it has secured a 20-year extension to the production license for the 130-year Oil Mining License (OML) block offshore Nigeria, following the settlement of a payment row with partners.
With an average production of 282,000 barrels of oil equivalent per day last year, the Niger Delta project is seen by global energy giant France as a contributor to energy security not only in Africa’s largest economy but also in europe Almost 30 percent of last year’s production “was gas sent to the LNG plant in Nigeria, contributing significantly to Europe’s energy security,” TotalEnergies said in a press release announcing the renewal.
The extension allows TotalEnergies, which operates the block with a 24 percent stake, and its partners to proceed with pre-development studies of a new discovery that would be added to the Akpo and Egina fields, brought into production on 2009 and 2018 respectively.
“This 20-year extension will allow us to move forward with FEED [front-end engineering design] studies on the Preowei tie-back project that aims to valorize a discovery using existing facilities in line with the company’s strategy of focusing on low-cost, low-emission assets,” Henri-Max Ndong-Nzue, Senior Vice President of exploration and production of TotalEnergies. for Africa, he said in the announcement.
The announcement follows the signing of agreements by TotalEnergies’ upstream unit in Nigeria, the Nigerian National Petroleum Co. Ltd. (NNPC) and its partners to ensure the continued development of the OML130 block.
“The suite [of deals] Includes Production Sharing Contracts, Amendment of Heads of Agreement (HoA), Settlement Amortization Agreement, Concession Contracts for 1 PPL [petroleum prospecting license] and 3 PMLs [petroleum mining leases]and Lease & License Instruments,” the state-controlled NNPC announced on Twitter on Thursday, without detailing the deals.
The other partners in the project are China’s state-owned CNOOC Ltd. with a 45% stake, local private company South Atlantic Petroleum Ltd. (15%) and Prime Oil & Gas Coöperatief UA (16%), based in the Netherlands. Africa Oil Corp. of Canada has half of Prime’s interest in OML130 as Prime’s 50 percent owner.
Industry reform
The new license operates under the terms of the new Petroleum Industry Act (PIA), making the three fields “the first assets to effectively benefit from the tax terms of the PIA,” Africa Oil said in a separate statement of the media
“The renewal of OML 130 is very good news for the company and its shareholders,” Africa Oil President and CEO Keith Hill said in the statement. “This license is the core of our Nigerian investment and accounts for the majority of Prime’s production and cash flows.
“It also includes attractive growth opportunities such as the undeveloped Preowei oil discovery, which we can now move towards a final investment decision.”
Approved in 2021 to replace the Petroleum Law, the new law provides support for infrastructure financing, investment promotion and a simplified tax on hydrocarbons. The Midstream and Downstream Gas Infrastructure Fund aims to grow the national market for natural gas produced from privately funded projects, as well as enable risk sharing to encourage private investment. Meanwhile, the collection of the tax on fossil fuels has been limited to “crude oil, as well as field condensates and liquid natural gas liquids derived from the associated gas and produced in the field upstream of the measurement points”, as as stated in the text of the legislation.
However, the Nigerian Content Development and Monitoring Board (NCDMB) has said oil development continues to face regulatory hurdles, in addition to financial and security challenges. At the Nigerian Oil and Gas Opportunities Fair held in early May, NCDMB Executive Secretary Simbi Kesiye Wabote called for the removal of “political inconsistencies” and urged the government to pass complementary laws to the PIA “to give investors the necessary confidence to move forward”. as indicated in a press release from the NCDMB.
Oil development projects worth more than $50 billion were presented at the meeting for potential launch in the next five years, according to the NCDMB statement.
Oil is a key contributor to Nigeria’s economy. Oil and natural gas accounted for 6.21 percent of the country’s gross domestic product in the first quarter, making the sector the fourth largest component of the economy behind crop production, trade and telecommunications and information services, the National Statistics Office reported on 24 May.
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