The Nigerian National Petroluem Corporation and Bonga PSC have signed watershed agreements to unlock about two billion barrels of oil for Nigeria under the Oil Mining Lease 118.
Under the arrangement, the NNPC and Bonga PSC partners will be executing five agreements that will deliver about $700m of immediate benefit to Nigeria.
It will also help to ensure $6bn savings of arbitral liability on the Federal Government and unlock 10 000 direct and indirect employment opportunities to Nigeria.
This new agreement will also help to re-balance fiscal terms and address global competition in prioritization of investments by key players.
The OML 118 with its straddle fields boast of the presence of the five Major Players in the deepwater space not only in Nigeria but also globally.
OML 118 is the first major deepwater development in Nigeria in the deepwater Niger Delta 75 kilometres from shore containing the Bonga fields at water depts over 1000m.
The fields are one of the most prolific deep-water assets in Nigeria, boosting of almost 2 billion barrels of crude oil, up to 1TCF of gas, modest cost of operations and delivers a significantly level of profit for the investors with a sizeable take for the State.
The field also supplies gas to NLNG another strategically important asset to NNPC and its partners.
The NNPC had in February 2019 signed Heads of Terms (HoT) with the OML 118 PSC contractors which formed the commercial framework for parties to settle their differences, create pathway for a sustainable brighter future and a reference point for resolving the industry-wide PSC disputes.
The key feature of the terms of settlement include, clear terms on block ring-fencing, gas commercialization terms, replacement of disputed tax credits for clearer investment allowances, trade-offs on in-block consolidation and cost limits, early lease renewals, assurance of fiscal stability for investors, protection of profit sharing schemes and settlement of disputed past, among others.
The objective was that the HoT will translate to fully termed agreements including the Dispute Resolution Agreement and a new PSC Agreement for the OML 118 Contract Area.
After two years, the parties today have been able to agree to the anticipated full terms agreement including the new PSC and the Dispute Settlement agreement reflecting the major agreed terms of the HoT which finally creates a certainty for the desired brighter future.