The Nigerian National Petroleum (NNPC) has recently renewed its Oil Mining Lease (OML) 118 with the local subsidiaries of Shell, Total, Exxon and Eni for another 20 years, according to the company’s statement to the media. The five signed agreements include Dispute Settlement Agreement, Settlement Agreement, Historical Gas Agreement, Escrow Agreement and Renewed Production Sharing Contract (PSC) Agreement.
The agreement was signed between NNPC, Shell Nigeria Exploration and Production Company (SNEPC), Total Exploration and Production Nigeria Limited (TEPNL), Esso Exploration and Production Nigeria Limited (EEPNL) and Nigerian Agip Exploration (NAE). The deal denotes that it is the end of the long-standing disputes between the investors in the field over the interpretation of the fiscal terms of the production-sharing contracts where the Bonga deepwater oil field is located.
The Bonga deepwater field lies 120 kilometres southwest of the Niger Delta. It began production in November 2005 and is the first deepwater oil field in Nigeria. It has a production capacity of around 200,000 barrels of oil per day and 150 million standard cubic feet of gas per day. The government of Nigeria will immediately recognise revenue of $780 million from the signing of the agreement while it also frees the parties from over $9 billion in contingent liabilities. The deal is expected to develop several other projects in OML 118 along with the Bonga Southwest Aparo field.
Osagie Osunbor, country chair of Shell Companies in Nigeria, pointed out in the media that OML 118 renewal agreement will remain a watershed in the history of deep-water investments in the country. It will assure that the giant stride would further boost investor confidence in Nigeria.