‘How new exploration licences will improve Nigeria’s oil production’

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently concluded the execution of the Production Sharing Contract (PSC) of the Oil Prospecting Licence (OPL) 2001 and 2002. The licences are for offshore exploration in the Deepwater West Delta basin and is 2,000 square kilometres. The licence was awarded to TotalEnergies which owns 80% and South Atlantic […]

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) recently concluded the execution of the Production Sharing Contract (PSC) of the Oil Prospecting Licence (OPL) 2001 and 2002.

The licences are for offshore exploration in the Deepwater West Delta basin and is 2,000 square kilometres.

The licence was awarded to TotalEnergies which owns 80% and South Atlantic Petroleum with 20% in 2024.

But the licence belongs to the Nigerian National Petroleum Company Limited (NNPCL) which serves as a concessionaire, on behalf of Nigeria.

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This means the TotalEnergies and Sapetro would explore the potential of the oil field and when exploration is completed, would be converted into a mining license that extracts crude oil and gas.

How license will improve Nigeria’s oil production

Speaking during the signing ceremony for the PSC, The Commission Chief Executive (CCE) of NUPRC, Engr. Gbenga Komolafe, said the project signals the start of a committed work programme that will help Nigeria unlock the untapped geological potential of its deepwater, expand reserves, boost production, and strengthen Nigeria’s energy security.

“It also affirms our broader vision to make Nigeria the premier destination for upstream investment in Africa.”

He added that the commission is working hand-in-hand with stakeholders, especially NNPC Limited as the concessionaire, devoted significant time and expertise to develop a new standardised PSC template.

He said the template reflects the spirit and intent of the PIA, ensuring clarity, consistency, and fairness for the entire industry.

On his part, the GCEO of NNPCL, Engr. Bayo Bashir Ojulari, said the offshore assets are amongst NNPCL’s key focus areas as a concession acting on behalf of the federation.

He said the sharing contract is developed in compliance with Section 85 of the PIA and Regulation 23.1 of the Petroleum Licensing Rounds Regulation 2024.

He said the project is the first with robust gas terms, including a profit gas split that incentivizes monetization of non-associated gas.

“The PSC has robust fiscal terms. One, a signature bonus of $10m, production bonus of 2 million barrels and 4 million or cash equivalent on attainment of 35 million barrels and 100 million barrels production respectively. So there is an incentive for performance, which we think is very good.

“A crude profit oil split based on cumulative production. A gas profit split based on cumulative associated gas sales, not just production. Cost per limit of 70% that allow to ensure that there is continuous flow of production funds into the Federation,” he added.

Senior Vice-President Exploration at TotalEnergies, Kevin McLachlan, said it is honored to be the first international company to be awarded exploration licenses in a bid round in Nigeria in more than a decade, marking a new milestone in its long-term partnership with Nigeria.

“These promising block captures are fully aligned with our strategy of strengthening our Exploration portfolio with drill-ready and high impact prospects that have the potential for low-cost and low-emissions developments from new discoveries in our core areas of expertise.”

 

 …810,000 deepwater oil field crude production

It would be recalled that Komolafe, at a stakeholders’ workshop on deep/shallow water cluster/nodal development, said the government is implementing efforts to revive Nigeria’s offshore oil production, which has suffered a decline in recent years.

He said if fully implemented, the additional output could raise Nigeria’s total monthly crude production by 2.51mbpd with condensates.

This, he said, would significantly strengthen the country’s revenue generation capacity and improve compliance with OPEC+ production quotas.

He said the plan was conceived in response to the industry’s dwindling offshore output and the need to harness untapped reserves for sustainable growth.

“At the peak of our deep water oil production in 2016, Nigeria was producing about 800,000bpd. Sadly, that figure has now dropped to below 500,000 bpd,” he said.

 

 

 

He explained that its data showed that there are over 5.13 billion barrels of oil and 13.53 trillion cubic feet (tcf) of gas still sitting untapped in the deep water acreages.

 

 

 

He said of this, 3.59 billion barrels fell under 2P reserves, meaning that they were proven and probable but yet undeveloped.

 

 

 

“A preliminary regulatory deep-dive through the Field Development Plans (FDPs) approvals indicates that current developments-in-view could unlock around 1.55 billion barrels of oil and condensate and another 1.49 tcf of associated gas.

 

“Once these approved FDPs are executed, we could see peak oil production rise by as much as 810,000 barrels of oil per day.

 

 

 

“A new Shallow and Deep Water Cluster Development Committee was inaugurated within the NUPRC to work closely with International Oil Companies (IOCs) and indigenous producers to identify and mature these opportunities.

 

 

 

“Through this collaborative approach, we want to maximise returns from existing assets, ramp up volumes, and reduce unit technical costs,” he said.

 

 

 

Komolafe expressed dissatisfaction that in spite of the huge potential, the deep water fields were underutilised due to challenges such as funding gaps, infrastructure limitations, regulatory bottlenecks and delayed project sanctions.

 

 

 

He said the eight Floating Production Storage and Offloading (FPSOs) units, were grossly underutilised, adding that with collaboration, more would be achieved.

 

 

 

The CCE added that deep offshore reserves currently account for 18 per cent of Nigeria’s total oil and condensate reserves, with major discoveries such as Bonga, Agbami, Egina, and Erha fields leading the way.

 

 

 

He said that currently the country had cumulatively produced over 4.4 billion barrels from deep water operations with contributory efforts from Shell, ExxonMobil, TotalEnergies, Agip and Chevron.

 

 

 

Komolafe, however, urged operators to embrace its collaborative model and commit to delivering results that would drive energy security, economic stability, and prosperity for all stakeholders.