By Adedapo Adesanya
US energy giant, Exxon Mobil Corporation, has renewed two deepwater leases in Nigeria for 20 years. The Oil Mining Leases (OMLs) were among the first permits granted under the Petroleum Industry Act (PIA) signed recently by President Muhammadu Buhari.
It also renewed production-sharing contracts (PSCs) with the state-owned Nigerian National Petroleum Company (NNPC) Limited, it said on its Twitter account.
“We are pleased to announce the renewals of our OMLs 133 (Erha) and 138 (Usan) deepwater leases for a further 20–year period. This includes extensions of Production Sharing Contracts with our partner NNPC Limited,” it announced in a recent post on Twitter.
The permits for Oil Mining Leases 133 and 138 were due to expire in 2026 and 2027 but were renewed early under sweeping legislation passed last year known as the Petroleum Industry Act.
The licenses contain deep-water fields from which the Nigerian government is eager to extract more oil and gas.
“These extensions enable us and our partners to unlock the potential value in these OMLs and to bring forward additional investment,” Exxon said.
Three other deep-water leases were renewed at the same ceremony in “a major step” toward boosting production, the NNPC said on its Twitter account. Output in Africa’s largest crude producer has been declining consistently over the past 18 months, with the government blaming rampant theft from the onshore pipelines that crisscross the Niger Delta.
Other companies with interests in the five extended licenses and production-sharing contracts include Chevron Corporation, Equinor ASA, Total Energies SE, Shell Plc, and Cnooc Ltd.
As the country faces challenges of declining oil production from mature fields, coupled with the reduced capital expenditure climate brought about by the COVID-19 pandemic, the PIA aims to enhance the sector’s attractiveness for foreign investment, ensuring a market-driven regulatory environment that will accelerate the country’s industry developments.
PIA comprises a complete overhaul of the administrative, regulatory and fiscal regime in Nigeria’s energy sector, restructuring key petroleum institutions in order to streamline processes and drive the country’s oil and gas industry expansion.
Notable regulatory reforms implemented through the PIA include the creation of a new upstream regulator which replaced the Department of Petroleum Resources; the creation of a new Nigerian midstream and downstream petroleum regulatory authority; and the replacement of the NNPC by the NNPC Limited which will operate on a commercial basis without government funding.
