Uche Usim, Abuja
The Nigerian National Petroleum Corporation (NNPC) has signed a dispute resolution agreement with its partners, China National Offshore Oil Company (CNOOC) and South Atlantic Petroleum (SAPETROL) on the development of Oil Mining Lease (OML) 130.
The peace deal is expected to rev up crude oil production to three million barrels per day and unlock gas revenues to about $225 million in the short term and $510 million in the long run for the federation.
Speaking at the signing of Head of Terms (HoT) agreement with the partners at the NNPC headquarters at the weekend, the Group Managing Director of the Corporation, Mr Mele Kyari, said that the deal was part of the Corporation’s Production Sharing Contract (PSC) Dispute Resolution and Renewal Strategy of 2017 aimed at securing out of court settlement of all disputes around the 1993 PSCs and agreeing on terms for their renewal.
According to him, the OML 130 dispute arose from recognition of certain cost and discordant interpretation of the fiscal terms of the PSC by NNPC and the contractor parties.
Kyari added that with the resolution and signing of the Head of Terms (HoT) document which sets out the terms agreed in principle between parties in the course of negotiations, apart from unlocking over $225 million of gas revenues, it would also enable settlement of renewal fees and create an environment conducive to further development of OML 130 with associated benefits to the Federation.
“We are doing this with every other partner in the PSC dispute, we believe that we can close this engagement and conversation with all of you. The HoT will clearly enable us to proceed and have a full settlement, and this will benefit all of us,” Kyari stated.
In his response, the Managing Director of CNOOC, Mr Xie Vincent Wensheng, said that the agreement has opened a new chapter in his company’s relationship with NNPC, stressing that it has provided a win-win situation for all parties.
On his part, Managing Director of SAPETROL, Mr Toyin Adenuga, said that the resolution of the dispute was a very important step towards further development of OML 130 and other new fields as the terms are now clearly spelt out.
The execution of the HoT signals the resolution of a tax dispute that arose from the $2.3 billion acquisition of a 45 per cent stake in OML 130 by CNNOC from SAPETRO in 2006.
The OML 130 consists of the Akpo and Egina Fields, which have been producing since 2009 and 2018 respectively.