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NNPC Ltd signs new PSC agreement, launches crude oil theft reporting app

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…To save Nigeria about $9bn potential contingent liability

By Gloria Akudoro, Abuja

As the dividends of PIA continue to linger, the Nigerian National Petroleum Company Limited   (NNPCL) on Friday amicably renewed the signing of the fully termed agreement for the negotiated Production Sharing Contract (PSC) Agreement with five oil partners in order to shrug off uncertain and attract more investment in the sector.

Signing the PSC Agreement with several oil majors which took place at the NNPC Tower in Abuja, the Group Chief Executive Officer, NNPC Limited, Mallam Mele Kyari, maintained that the deal will aid save Nigeria and the Company about $9bn contingents liability.

At the signing ceremony, the NNPC Limited and its Production Sharing Contractors renewed agreement in five (5) Oil Mining Lease (OML): OML 128 situated at the central part of the Niger Delta, contained in Agbami-Ekoli field; OML 130 situated in the deepwater Niger Delta, contained the Akpo and Egina field; OML 132 is situated at the Western Niger Delta, contained Apart field; OML 133 contained the Erha, Erha North and BosI field and deepwater OML138 contained Usan field. A development expected to unlock over $500bn in revenue for the country.

Kyari who described the deal to be a major landmark achievement since it transited to a limited liability company under the Company and Allied Matters Act (CAMA) hinted that the execution of fully termed agreements for the renegotiated PSCs will ultimately accelerate inflow of direct foreign investment, expanded access to affordable energy, job creation and socio-economic development.

“The signing of the new PSCs is a key milestone achievement by NNPC Ltd which would ultimately unlock opportunities within the Nigeria Upstream sector.

“The execution of the PSCs will deepen investment and development of Nigeria’s rich petroleum resources and ensure that the trifold mandate of the NNPC Ltd to ensure energy availability, sustainability, and accessibility is achieved,” said NNPC GCEO.

Although, he attributed the conflicts to the 1993 PSC Agreement which over the years yielded major issues that led to arbitrations and all forms of litigations thereby destroying it relationship with partners and causing set-back to the nation.

It will be recalled that in Nigeria the Production Sharing Contracts commenced with the 1993 PSCs, subsequently followed by 2000, 2004, 2005, 2007, 2010 to date. The PSC in Nigeria was mainly motivated by funding challenges faced by the joint venture arrangements that led to reduction in production and revenue.

Kyari further stressed that the execution of PSC Agreement today wouldn’t have been a reality without the leadership role of Muhammad Buhari’s administration that agreed to smoothly resolve amicably this conflicts that has lingered in a manner it becomes a win-win situation through the provision contained in Petroleum Industry Act (PIA).

He said the PIA in Section 311(2) stipulates that new PSC agreements under new Heads of Terms will be signed between NNPC Ltd as Concessionaire and her Contractor Parties within one year of signing the PIA into law, giving a deadline of 15th August 2022.

“This provision paved the way for the resolution of lingering disputes which created investment uncertainty and stifled new investments in the nation’s deep offshore assets. To achieve this, NNPC Ltd leveraged on the near end term of the PSCs and the parties’ interest to renew the PSCs as a negotiation currency in bringing the contractors to work towards trading the past for the future.

He also said that the renewed PSCs would impact greatly in improving long-term relationships with contractors, elimination of contractual ambiguities especially in relation to gas terms, enable early contract renewal amongst others to move the nation forward.

Speaking, the GGM, National Petroleum Investment Management Services (NAPIMS), Bala Wunti, stated since the introduction of PSC into Nigeria’s hydrocarbon production algorithm, over 5.9billion barrel of oil equivalent has so far been produced and monetized by the various PSCs arrangements.

He added that in the last two decades, the PSCs have commutatively accounted for about 40% of Nigeria’s oil production.

Wunti, disclosed that NAPIMS as the Asset Manager of all the producing PSCs in Nigeria, has played pivotal roles in the renegotiation of major PSCs assets under our supervision including OMLs 119, 125, 128, 130 ,132, 133 and OML 138 under the leadership of the NNPC GCEO and GED Downstream.

NAPIMS GGM also noted anticipation of this history signing of the PSC NAPIMS had been actively working in collaboration with PSC Contractors to emplace essential Final Investment Decision parameters for major Deepwater projects including Chevron operated AGBAMI Gas Projects, OWOWO and BOSI development by ExxonMobil, SNEPCO’s BONGA North and BONGA Southwest Aparo, BOLIA-CHOTA, the PREOWEI Project being operated by TotalEnergies.

Also speaking at the event, the Chairman/Managing Director of ExxonMobil Companies in Nigeria, Mr. Richard Laing noted that the renewal of the Usan and Erha leases validates the company’s commitment to maintain a significant deepwater presence in Nigeria, via Esso Exploration and Production Nigeria (Deepwater) Limited.

“This signing enables ExxonMobil and its partners to unlock the potential value in these leases and to bring forward additional investment,” Mr. Laing stated.

Meanwhile, the NNPC Board Chairman, Senator Margery Chuba-Okadigbo, has thanked the captains of industry and all who jointly worked towards the successful execution of the PSC Agreement.

The Executive Chairman, Federal Inland Revenue Services, Muhammad Namu, said it’s the duty of the service to bare witness to agreement and to ensure that transparency leads.

Another milestone achieved by the NNPC Limited under the administration of Mr President is the launching of Nigerian Crude Oil Theft Incidence Reporting App which is already in the cloud to monitor activities of oil theft in the Niger Delta.

The Company also released a website link and contact hotlines to enable direct reporting of any oil theft activity and individual with valid information will be rewarded handsomely.

Energy

Shell launches unmanned vessel for undersea pipeline evaluation

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…As stakeholders decry AI infiltration, potential unemployment

Stakeholders have called for caution in the deployment of artificial intelligence and technologies which may result in job losses in the Nigerian oil and gas sector.

The stakeholders made the call following Monday’s announcement by Shell Petroleum Development Company of Nigeria (SPDC) that it had introduced surface water drone for pipeline survey in its shallow water operations.

Shell had said that it had deployed an Uncrewed Surface Vessel (USV) for pipeline route survey in the Niger Delta.

The USV, a water surface drone with no human crew, can be used for underwater pipelines examination and integrity assessment among others.

SPDC announced the innovation, the first in Nigerian oilfields, in a statement by its Media Relations Manager, Mrs Abimbola Essien-Nelson.

According to the energy firm, the USV saves time and cost as well as reduces exposure to personnel and environment.

“Last month, the remotely operated USV conducted a pipeline route survey at Bonny for a total of 166 hours.

“It is the first deployment of an USV for a pipeline route survey in shallow water in Nigeria and the longest such single mission in the Shell Group,” Essien-Nelson said.

She quoted Mr Steve Keedwell, SPDC’s Chief Surveyor and Head of Offshore Survey Operations, as describing the deployment of the USV as the new face of survey in Nigeria.

According to the statement, on-site and remote operators deployed the USV.

“We recorded increased productivity and better data acquisition at the survey at Bonny.

“Deploying the USV reduced carbon dioxide emissions by 97 per cent because the vehicle is designed as diesel electric.

“The efficiency of data acquisition coupled with improved data quality whilst reducing personnel exposure to zero is transforming how we execute surveys,” she said.

She further said that SPDC partnered with different stakeholders such as Nigerian Upstream Petroleum Regulatory Commission, NNPC Upstream Investment Management Services and the Nigerian Content Development and Management Board on the initiative.

Others were the Nigerian Navy Hydrographic Office and the Nigerian Maritime Administration and Safety Agency.

She noted that in furtherance of its Nigerian content development programme, SPDC worked closely with a Nigerian vendor, Compass Survey Limited, which deployed the vessel with support from their foreign partners and Unmanned Survey Solutions, UK

Essien-Nelson also quoted SPDC’s General Manager, Nigerian Content Development, ‘Lanre Olawuyi, as saying the vendor was training on-site remote operators to build local capacity.

“This is an exciting chapter in our efforts to develop Nigerian content in the conduct of surveys,” Olawuyi said.

Olawuyi added that the innovation in the survey at Bonny was attracting interests from the oil and gas industry and beyond.

“We will continue to support Nigerian companies in the domestication of technology and innovations,” he said.

The statement allayed fears of job losses, saying the USV creates jobs at the remote control centre where data from the unmanned vessel is received and processed.

But an oil services expert, Mr Henry Itrechio noted that the introduction of technologies that cut off jobs should be used with caution due to the adverse social impact of job losses on the economy.

“Incursions of Artificial Intelligence ought to be handled with cautious optimism as machines cannot replace humans.

“Like in the case in point, the USV is better because the danger of having humans in undersea vessels is very high.

“The USV is not without its own drawbacks and its pilot deployment for pipeline surveillance in shallow waters should be further studied to ascertain the suitability for deep-sea operations,” he said.

He also noted that the disadvantages of using USVs for pipeline surveys in the oil industry include limitations in communication, navigation, payload capacity, range and speed when compared to undersea vehicles.

Also speaking, Dr Nnimmo Bassey, an environmental rights crusader, who welcomed the application of drone technology for underwater pipeline monitoring, argued that the claim of 97 percent reduction in carbon dioxide emissions was bogus and needed to be validated.

“The drones can be good for monitoring pipelines for defects, leakages, and corrosion or illegal activities.

“To say that they lead to 97 percent carbon dioxide emission reduction is a vacuous claim that can only be made by carbon speculators seeking profit rather than halting pollution.

“The drones whether subsea or above water cannot in any way eliminate human agency in halting harmful activities,” he said.

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Energy

Divestments: Our role is to ensure Nigerians reap benefits of oil sector, not hinder investments — NNPC Ltd

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Group Chief Executive Officer of the  Nigerian National Petroleum Company Limited (NNPC Ltd) has harped on the role of the National oil company as a body committed to ensuring Nigerians reap the gains of the nation’s investment in the oil and gas sector.

Speaking at the opening ceremony of the 7th edition of the Nigerian International Energy Summit 2024 (NIES 2024), which held at the State House, Abuja, on Tuesday, Kyari noted that NNPC Ltd as the largest partner to all the oil producing companies in Nigeria, has assured that its role in the divestment of the International Oil Companies from onshore and shallow water assets in the country is that of a facilitator, and not an obstacle.

He explained that by virtue of its statutory mandate as the enabler of national energy security, NNPC Ltd.’s role is to ensure that, at the end of the day, there is optimal and sustainable production from the divested assets to guarantee energy security for the benefit of Nigerians.

Kyari also disclosed the company’s willingness to invest in the proposed African Energy Bank as a way of ensuring sustainable funding for energy projects in Africa to guarantee energy security.

On investment in energy infrastructure to drive energy security, the GCEO further disclosed that the completion of the Obiafu-Obrikom-Oben Pipeline was in sight as the tunnelling across the River Niger was currently ongoing.

He assured stakeholders of the company’s commitment to work with them to close the energy deficit gap and create prosperity for Nigerians, adding that from all indications, all issues of energy scarcity in the country would be over in the next 10 years.

The event saw the participation of key industry and governmental figures, including Haitham al-Ghais, Secretary-General of OPEC; Omar Farouk Ibrahim, Secretary General of the African Petroleum Producers’ Organization; Sen. Heineken Lokpobiri, Minister of State for Petroleum Resources (Oil); Hon. Ekperikpe Ekpo, Minister of State for Petroleum Resources (Gas); Amb. Nicholas Agbo Ella, Permanent Secretary of the Ministry of Petroleum Resources; and the Minister of Information and National Orientation, Mohammed Idris Malagi, who represented the Nigerian President, Bola Ahmed Tinubu.

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Petroleum subsidy strains economy leading to inefficiencies, hindering investment in energy security —Tinubu

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By Matthew Denis

President Bola Tinubu has disclosed that the petroleum subsidy has, over the years, strained Nigeria’s economic resources, leading to inefficiencies and, most importantly, hindering the nation’s ability to invest in critical areas of energy security.

The President made the disclosure while making  his inaugural speech  at the ongoing Nigeria International Energy Summit (NIES) held in Abuja on Tuesday.

Speaking on the theme of this year’s summit, “Navigating the New Energy World Order: Security, Transition, and Finance,” he said it is not only timely but also critical as we find ourselves at the crossroads of a rapidly transforming global energy landscape.

The President stressed that “Energy Security, as we know, is of paramount importance. It is not just a national concern; it is a global imperative. In the face of emerging challenges, both geopolitical and technological, we must ensure the resilience of our energy infrastructure. The decisions we make today will impact the energy security of generations to come.”

“By removing the subsidy, we are creating a more transparent and accountable energy sector. The funds that were previously allocated to subsidizing petroleum products are now redirected towards developing and upgrading our energy and other social infrastructure.

“The removal of the subsidy has encouraged further private sector participation in the energy industry with potential of attracting more local and international investors, fostering innovation and competition that will drive down costs and improve the overall efficiency of our energy sector.

”I am acutely aware of the immediate impact this decision may have had on our citizens, especially those with lower incomes. Therefore, in parallel with the subsidy removal, my administration is committed to implementing social intervention programs to mitigate the short-term effects on vulnerable populations. These programs will ensure that the burden of the subsidy removal is shared equitably and that the most vulnerable among us are protected.

“The decision to remove the petroleum subsidy is not an easy one, but it is a necessary one for the long-term energy security and economic prosperity of our beloved nation. I call upon all stakeholders, including industry experts, policymakers, and the general public, to engage in constructive dialogue and collaboration as we navigate these challenging but transformative times. Together, we can build a resilient and sustainable energy future for Nigeria.”

According to him, “Finance, as always, plays a pivotal role in driving the energy agenda. Adequate funding is crucial to support the development and deployment of cutting-edge technologies, infrastructure, and projects that will shape our energy future.”

“I challenge each one of you to actively participate, engage in meaningful discussions, and contribute your expertise towards finding solutions to the complex energy challenges we face. Together, we can navigate the new energy world order with resilience, innovation, and a shared commitment to a sustainable and secure energy future for Nigeria.”

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