Nigeria’s upstream oil and gas industry recorded a fresh milestone on Monday as the Nigerian Upstream Petroleum Regulatory Commission signed a production sharing contract with TotalEnergies and South Atlantic Petroleum for Petroleum Prospecting Licences 2000 and 2001.
The deal, finalised in Abuja, covers about 2,000 square kilometres in the Niger Delta Basin.
The contract gives TotalEnergies an 80 per cent interest as operator, while Sapetro will hold a 20 per cent stake. Fiscal terms in the package include a signature bonus of ten million dollars, as well as production bonuses of two million and four million barrels, or their cash equivalents, tied to output milestones of 35 million and 100 million barrels respectively.
NUPRC Chief Executive Officer, Gbenga Komolafe, described the agreement as “a new chapter” for Nigeria’s upstream sector.
He noted that it followed the commission’s new cluster and nodal development initiative launched last month to unlock an additional 810,000 barrels per day from deepwater fields. Komolafe praised President Bola Tinubu for the reforms brought through the 2024 executive orders on fiscal incentives, local content, and contract timelines.
“It gives me great pleasure, and indeed a deep sense of purpose, to welcome you to this important closing ceremony for the execution of the Production Sharing Contract covering Petroleum Prospecting Licences 2000 and 2001,” Komolafe said. “These licences, awarded to TotalEnergies and its partner South Atlantic Petroleum in the 2024 Licensing Round, mark a new chapter in our upstream oil and gas industry.”
He stressed that the PSC sets out clarity on cost recovery, profit oil sharing, royalties, host community obligations, gas utilisation, decommissioning, and environmental remediation. “Today is not just about signing documents. It is about laying the foundation for new exploration and investment. This PSC signals the start of a committed work programme that will help us unlock the untapped geological potential of our deepwater, expand our reserves, boost production, and strengthen Nigeria’s energy security,” he said.
Komolafe explained that attracting investors had not been easy during the 2024 Licensing Round. “Of course, this journey was not without challenges. Attracting investors to the 2024 Licensing Round was not easy. But with the approval of Mr. President, the Commission adopted a pragmatic solution introducing minimum signature bonuses as consideration for asset awards. This approach aligned Nigeria with international best practice, where countries like Thailand, Israel, Guyana, and Brazil have moved away from heavy, front-loaded bonuses towards minimal or no signature bonuses to attract investment.”
He added that the commission trusts TotalEnergies and its partner to meet their obligations within the agreed timeframe for mutual benefits.
The Group Chief Executive Officer of NNPC Limited, Bayo Ojulari, also addressed the ceremony, describing the contract as “unique” and the first deepwater PSC since the Petroleum Industry Act came into effect. He said it is also the first to cover both crude oil and natural gas comprehensively.
“This particular PSC is unique in many respects, and I just want to highlight a few,” Ojulari stated. “It is the first in the deep water offshore PSC following the successful completion of the 2024 licensing round. It is the first PSC that comprehensively covers in scope both crude oil and natural gas. It is the first PSC with robust gas terms, including a profit gas split that incentivises monetisation of non-associated gas. As you know, the whole non-associated gas in the deep water is one of the critical areas that we need to really push the frontiers in Nigeria.”
He outlined fiscal incentives including the ten million dollar signature bonus, production bonus of two million barrels, and four million barrels or their cash equivalents upon reaching the set production targets. According to him, “These terms enhance the Federation’s stake while ensuring a good return on investment to the contractor. This PSC is an attempt to address the gap of the past with a document that is reflective of the PIA, resilient, and complete. It will help us move closer to the target of three million barrels per day and attract new investments.”
The Country Chair of TotalEnergies in Nigeria, Matthieu Bouyer, reaffirmed the company’s long-standing commitment to the country. “Today marks the formal beginning of what we hope will be a new chapter of value creation in Nigeria’s upstream sector,” he said.
Bouyer noted that TotalEnergies has operated in Nigeria for more than 60 years, employing over 1,800 people and producing over 400,000 barrels per day of oil equivalent in 2024. He said the company intends to move forward quickly and responsibly with the work programme for the awarded blocks.
He also stressed that TotalEnergies will apply its global expertise to deliver low-cost, low-emission developments that will support Nigeria’s ambition of reaching three million barrels per day of oil production. The company’s commitment, he said, is further reflected in its downstream operations with more than 500 service stations across the country.
“We are determined to deliver results that will benefit all stakeholders, also reinforcing Nigeria’s content-creating job and leveraging this entry to generate value for the country and its people,” Bouyer concluded.
The Nigerian Upstream Petroleum Regulatory Commission said the signing of the PSC fits its wider goal of positioning Nigeria as the premier destination for upstream investment in Africa, providing clarity for investors while ensuring benefits for the nation’s economy and energy security.
