Nigeria National Petroleum Corporation, NNPC, has said that it has executed fully termed agreements for the renegotiated PSCs on 12th August 2022. NNPC in a statement said “This is a major landmark achievement since our transition to a limited liability company under the Company and Allied Matters Act (CAMA). The Petroleum Industry Act (PIA) was signed into law by President Muhammadu Buhari on 16th August 2021. This law gave NNPC the legal backing to renegotiate all her existing PSCs in conformance to the provisions of the new Act within a 1-year period.
“The PIA in Section 311(2) stipulates that new PSC agreements under new Heads of Terms will be signed between NNPC Ltd as Concessionaire and her Contractor Parties within one year of signing the PIA into law, giving a deadline of 15th August 2022. This provision paved the way for the resolution of lingering disputes which created investment uncertainty and stifled new investments in the nation’s deep offshore assets. To achieve this, NNPC Ltd leveraged on the near end term of the PSCs and the parties’ interest to renew the PSCs as a negotiation currency in bringing the contractors to work towards trading the past for the future.
These renewed PSCs would provide several benefits such as improved long-term relationships with contractors, elimination of contractual ambiguities especially in relation to gas terms, enable early contract renewal amongst others.
“The signing of the new PSCs is a key milestone achievement by NNPC Ltd which would ultimately unlock opportunities within the Nigeria Upstream sector. The execution of the PSCs will deepen investment and development of Nigeria’s rich petroleum resources and ensure that the trifold mandate of the NNPC Ltd to ensure energy availability, sustainability, and accessibility is achieved. Ultimately, the new PSCs will provide inflow of Direct Foreign Investment, expanded access to Affordable Energy, Job Creation and Socio-Economic Development” the statement said.