Nigerian National Petroleum Corporation (NNPC), on Saturday, said it has signed an agreement with its partners in Oil Mining Lease, OML, 130, China National Offshore Oil Company (CNOOC) and South Atlantic Petroleum (SAPETRO), to settle all outstanding fiscal issues surrounding the development of the oil assets which had lingered since 2006.
In a statement in Abuja, the NNPC said the resolution of the fiscal issues would help the country meet its target of three million barrels per day of crude oil production and unlock $225 million and $510 million of gas revenue in the short and long term respectively.
According to the NNPC, the dispute arose from recognition of certain costs and discordant interpretation of the fiscal terms of the Production Sharing Contract, PSC, by NNPC and the contractor parties.
Specifically, the NNPC disclosed that the execution of the Head of Terms, HoT, agreement signals the resolution of a tax dispute that arose from the $2.3 billion acquisition of a 45 per cent stake in OML 130 by CNOOC from SAPETRO in 2006.
It noted that the OML 130 consists of the Akpo and Egina Fields which have been producing since 2009 and 2018 respectively and is operated by Total Upstream Nigeria Limited, which holds 24 per cent stake, while Petrobras Oil and Gas BV and SAPETRO hold 16 per cent and 15 per cent stakes respectively.
Speaking at the signing of Head of Terms (HoT) agreement with the partners in Abuja, Group Managing Director of the 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 PSC and agreeing on terms for their renewal.
Kyari stated that 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.
He said: “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.”
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 spelled out.