In a landmark development for Nigeria’s oil and gas sector, the Nigerian National Petroleum Company Limited (NNPCL) has finalized a groundbreaking Production Sharing Contract with French energy giant TotalEnergies and local partner South Atlantic Petroleum (SAPETRO) for two deepwater exploration blocks, marking the first such agreement with a major international oil company in over a decade.
The signing ceremony, held on Monday at the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) headquarters in Abuja, represents a pivotal moment in the country’s efforts to revitalize its upstream petroleum industry under the framework of the Petroleum Industry Act (PIA).
A Historic Return to Nigerian Waters
TotalEnergies’ successful bid for Petroleum Prospecting Licenses (PPLs) 2000 and 2001 breaks a ten-year drought of major international oil company investments in Nigerian exploration blocks. The French multinational, which brings over six decades of operational experience in Nigeria, will hold an 80% contractor interest, while SAPETRO, with three decades of local expertise, maintains a 20% stake.
“We are honored to be the first international oil company to be awarded an exploration block in 10 years,” said Mathieu Bouyer, managing director of TotalEnergies Nigeria. The executive emphasized the company’s commitment to “progress swiftly and responsibly” with exploration activities, targeting the drilling of their first well in the shortest possible timeframe.
Presidential Reforms Drive Investment Appeal
The deal’s completion is being credited to sweeping reforms implemented by President Bola Ahmed Tinubu through three critical Executive Orders issued in 2024. These reforms—covering fiscal incentives (Order #40), local content requirements (Order #41), and cost efficiency measures (Order #42)—have fundamentally transformed Nigeria’s investment landscape.
Engineer Gbenga Komolafe, Chief Executive of NUPRC, characterized the agreement as evidence that “President Bola Ahmed Tinubu’s 2024 Executive Orders have catalyzed massive investment inflows for shared prosperity.” The regulatory chief praised the transparent, competitive bidding process conducted under Section 73 of the PIA, which concluded on December 18, 2024.
Innovative Contract Structure Targets Gas Monetization
This PSC breaks new ground as the first comprehensive agreement covering both crude oil and natural gas exploration in Nigerian deep waters. Notably, it includes robust gas terms with a profit gas fleet specifically designed to incentivize the monetization of non-associated gas—a critical component of Nigeria’s energy diversification strategy.
The contract structure includes substantial financial commitments: a $10 million signature bonus, along with production bonuses of $2 million and $4 million for reaching specific barrel thresholds, or cash payments upon achieving 35 million barrels of production.
Economic Impact and Strategic Objectives
NNPCL Group Chief Executive Officer Bashir Bayo Ojulari positioned the agreement as a crucial step toward Nigeria’s ambitious production targets. “The PSC is a major milestone that will bring NNPCL closer to achieving the target of three million barrels per day and additional investments of $60 billion by the end of 2030,” Ojulari stated.
The deal is expected to generate multiple economic benefits:
- Unlocking previously untapped deep-water reserves
- Strengthening national energy security
- Creating employment opportunities
- Boosting government revenues through various fiscal mechanisms, including bonuses, taxes, and royalties
Regulatory Framework and Future Prospects
The agreement operates under strict regulatory oversight, with clear provisions for environmental stewardship through the Decommissioning and Abandonment and Environmental Remediation Fund requirements. The PSC also mandates a defined minimum work program with performance guarantees, ensuring accountability in exploration activities.
SAPETRO Managing Director Chukwuemeke Anagbogu praised the “very transparent and completely free process,” highlighting NUPRC’s leadership throughout the licensing round.
Looking Forward
This watershed moment signals a potential renaissance for Nigeria’s upstream sector, which has struggled with investment flight and security concerns in recent years. The successful conclusion of the 2024 Licensing Round may serve as a template for attracting additional international investment, with NUPRC officials expressing optimism about future bid rounds.
As Nigeria positions itself to leverage both traditional oil resources and emerging gas opportunities, this partnership between international expertise and local knowledge could prove instrumental in unlocking the country’s vast deep-water geological potential.
The agreement stands as a testament to the effectiveness of regulatory reform and transparent governance in restoring international confidence in one of Africa’s largest petroleum economies.
WHAT YOU SHOULD KNOW
After a decade-long investment drought, Nigeria has successfully attracted its first major international oil company back to its waters. TotalEnergies’ $10+ million commitment to explore two deepwater blocks represents a turning point driven by President Tinubu’s 2024 regulatory reforms and transparent bidding processes.
This breakthrough deal signals that Nigeria’s upstream petroleum sector is becoming investable again, potentially unlocking billions in future investments and moving the country closer to its ambitious target of 3 million barrels per day by 2030. The agreement’s innovative structure—covering both oil and gas with performance incentives—could serve as a blueprint for attracting more international players back to Nigerian waters.
