TotalEnergies SE has disclosed that it has secured a 20-year extension for the production license for the Oil Mining License (OML) 130 block offshore Nigeria, following the settlement of a payment row with partners.
The extension allows TotalEnergies, which operates the block with a 24 percent stake, and its partners to proceed with pre-development studies on a new discovery that would add to the Akpo and Egina fields, put into production 2009 and 2018 respectively.
With an average production of 282,000 oil-equivalent barrels a day last year, the Niger Delta project is seen by the French global energy giant as a contributor to energy security not only in Africa’s biggest economy but also in Europe. Nearly 30 percent of last year’s output “was gas sent to the Nigeria LNG plant, notably contributing to Europe’s energy security”, TotalEnergies said in a press release announcing the renewal.
Henri-Max Ndong-Nzue, TotalEnergies senior Vice President of exploration and production for Africa, said in the announcement that the extension will help it t continue its studies.
“This 20-year extension will enable us to move forward with the FEED [front-end engineering design] studies on the Preowei tie-back project which aims to valorize a discovery using existing facilities in line with Company’s strategy focusing on low-cost and low-emission assets.”Henri-Max Ndong-Nzue
The announcement follows the signing of agreements by TotalEnergies’ upstream unit in Nigeria, the Nigerian National Petroleum Co. Ltd. (NNPC) and their partners securing the continued development of the OML130 block.
The state-controlled NNPC announced on Twitter saying the suite [of deals] included Production Sharing Contracts, Heads of Agreement (HoA) Amendment, Settlement Repayment Agreement, Concession Contracts for 1 PPL [petroleum prospecting license] and 3 PMLs [petroleum mining leases], and Lease & License Instruments.
The other partners in the project are China’s state-owned CNOOC Ltd. With a 45 percent interest, local private company South Atlantic Petroleum Ltd. (15 percent) and Netherlands-based Prime Oil & Gas Coöperatief UA (16 percent). Canada’s Africa Oil Corp. holds half of Prime’s stake in OML130 as Prime’s 50 percent owner.
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 PIA fiscal terms”, noted Africa Oil in a separate media statement.
“The renewal of OML 130 is very good news for the Company and its shareholders”, Africa Oil President and Chief Executive Keith Hill said in the statement. “This license is the core of our Nigerian investment and accounts for most of Prime’s production and cashflows”.
“It also includes attractive growth opportunities such as the undeveloped Preowei oil discovery, which we can now take forward towards a final investment decision.”Keith Hill
Passed 2021 to replace the Petroleum Act, the new law provides for infrastructure funding support, investment promotion and a simplified hydrocarbon tax. The Midstream and Downstream Gas Infrastructure Fund aims to grow the domestic market for natural gas produced from privately funded projects, as well as enables risk-sharing to encourage private investment. Meanwhile fossil fuel tax collection has been limited to crude oil as well as field condensates and liquid natural gas liquids derived from associated gas and produced in the field upstream of the measurement points, 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 Opportunity Fair held earlier May, NCDMB Executive Secretary Simbi Kesiye Wabote called for the elimination of policy inconsistencies and urged the government to pass supplementary laws to the PIA to give investors the necessary confidence to move ahead, as stated in an NCDMB statement.
At the gathering over $50 billion worth of oil development projects were presented for potential launch in the next five years, according to the NCDMB statement.
Oil is a key contributor to Nigeria’s economy. Petroleum and natural gas comprised 6.21 percent of the nation’s gross domestic product in the first quarter, making this sector the fourth-largest component of the economy behind crop production, trade, and telecommunication and information services.