Nigeria signs first oil & gas production sharing contract

– As NNPCL, partners secure PPL 2000, 2001

Mkpoikana Udoma

Port Harcourt — In a historic move set to reshape Nigeria’s upstream oil and gas sector, the Nigerian National Petroleum Company, NNPC Ltd and the TotalEnergies–Sapetro Consortium have executed a Production Sharing Contract, PSC, for Petroleum Prospecting Licences, PPLs 2000 and 2001.

The agreement, signed at the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, headquarters in Abuja, is the first PSC in Nigeria to comprehensively cover both crude oil and natural gas exploration and production, underscoring the Federal Government’s renewed push to unlock hydrocarbon resources responsibly and profitably.

Group Chief Executive Officer of NNPC Ltd, Engr. Bashir Bayo Ojulari, described the deal as a watershed moment for the industry.

“This particular PSC is unique in many respects. It is the first PSC that comprehensively covers its scope, both crude oil and natural gas. It is the first PSC with robust gas terms, including a profit gas fleet that incentivises monetisation of non-associated gas,” Ojulari stated.

He added that the signing was not merely a contract execution but a testament to the success of the Petroleum Industry Act, PIA 2021, and a signal to the global investment community that “Nigeria is indeed poised for business.”

Ojulari emphasised that NNPC will leverage the partnership to deepen upstream operations and surpass previous deepwater successes through cutting-edge technology and high operational standards to ensure commercial viability and sustainability.

Also, NUPRC Chief Executive, Engr. Gbenga Komolafe, hailed the milestone as a product of the transparent, competitive and reform-driven framework introduced by the PIA.

“The award of the two offshore blocks, spanning about 2,000 square kilometres, is a direct product of the reforms under the PIA 2021,” Komolafe said, commending NNPC, TotalEnergies (80% interest) and Sapetro (20% interest) for their commitment, citing past successes on Egina and Akpo fields.

Managing Director of TotalEnergies E&P Nigeria, Mr. Matthieu Bouyer, described the development as a reaffirmation of the company’s 60-year commitment to Nigeria, noting that the award was secured through an open and transparent bid process.

“This is the first time in over 10 years that an international oil company has secured such deepwater assets in Nigeria,” Bouyer said.

Similarly, Sapetro’s Managing Director, Mr. Chukwuemeke Anagbogu, expressed optimism that the deal aligns with government aspirations for local content, responsible resource utilisation, and inclusive growth.

“These blocks provide a clear path to increasing reserves and assuring long-term production growth, playing a vital role in sustaining value creation for shareholders, stakeholders, and the nation,” Anagbogu noted.

The PSC outlines signature and production bonuses, performance-based work programmes, cost recovery and profit-sharing rules, royalties and taxes, as well as commitments for gas utilisation to cut flaring, decommissioning, environmental remediation, and host community development, all consistent with PIA provisions.

The landmark contract not only strengthens Nigeria’s deepwater investment appeal but also sets a precedent for how future upstream agreements can balance profitability, sustainability, and regulatory compliance.