The Nigerian National Petroleum Company (NNPC) Limited has renewed oil production sharing contracts (PSCs) with its partners, after nearly 30 years.
The state owned oil company said it also resolved lingering disputes with its production sharing contracts (PSCs) contractors.
PSCs are contracts between E&P and the government concerning how much of the resource extracted from the country each will receive.
According to the company, the parties renewed their agreements in five oil mining leases (OMLs), including 128, 130,132, 133, and 138, in a signing ceremony held in Abuja on Friday.
The development is expected to unlock over $500 billion in revenue for the country.
The PSCs were first introduced in 1993 and their renewal has since been stalled by disputes.
In a major step towards boosting Nigeria's crude production & unlocking investments in the deepwater space post Petroleum Industry Act (PIA) enactment,@nnpclimited & its Production Sharing Contracts (PSCs) Contractors have resolved their disputes & signed renewed PSCs. pic.twitter.com/HW65KHVdeE
— NNPC Limited (@nnpclimited) August 12, 2022
Speaking at the event, Mele Kyari, group chief executive officer (GCEO), NNPC Limited, said the new contract would end the litigation issues surrounding the 1993 PSCs.
Kyari said, “a major issue for all of us is all forms of litigations”.
“As you do this, it damages relationships and more than anything else, it stifles investment. That is why exactly that situation was brought to the table, that except for one asset, practically did crude oil enter into any new commitment, since 2007,” he said.
“This is clearly related to the disputes around the 1993 PSC, and we knew that as the JIA process was going on the process to put the Petroleum Industry Act, it was very obvious that the resolution or the dispute of the 1993 PSC is a critical part of that bargain.
“Today, we are happy. Our country kept its promise, and I understand very clearly that it would not have been possible except you had some courage of leadership, and all of us must give this credit to President Muhammadu Buhari, who agreed that we must resolve this most amicably. In a manner that benefits the country but also in a way investors recover their cost and make the competitive benefits that they must have from their investments.”