The Federal Government, through the Nigerian Upstream Petroleum Regulatory Commission, has signed a Production Sharing Contract with TotalEnergies and South Atlantic Petroleum for Petroleum Prospecting Licences 2000 and 2001.

The licences, awarded during the 2024 licensing round, cover about 2,000 square kilometres in the Niger Delta Basin. TotalEnergies will operate the blocks with an 80 per cent interest, while Sapetro will hold the remaining 20%.

The fiscal terms include a $10 million signature bonus and production bonuses of two million and four million barrels—or their cash equivalents—upon achieving cumulative output of 35 million and 100 million barrels, respectively.

Speaking at the signing ceremony in Abuja on Monday, NUPRC Chief Executive Officer Gbenga Komolafe described the deal with NNPC Limited and the TotalEnergies–Sapetro consortium as “a new chapter” for Nigeria’s upstream sector. He noted that the agreement aligns with the commission’s recent efforts to unlock an additional 810,000 barrels per day from deepwater fields through its new cluster and nodal development strategy.

Komolafe also commended President Bola Tinubu’s 2024 executive orders on fiscal incentives, local content, and contract timelines, saying the reforms have boosted investor confidence.

He said, “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.

“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. Let me begin by paying glowing tributes to His Excellency, President Bola Tinubu for the bold initiatives and reforms in the industry as well as his steer that undeveloped assets must return to the basket for rebidding and award to competent bidders in line with provisions of the PIA. The awardees of 2000 and 2001 licences clearly have become beneficiaries of the laudable initiatives and reforms of Mr President.”

Komolafe noted that the PSC outlines clear provisions on cost recovery, profit oil sharing, royalties, and host community obligations under the Petroleum Industry Act, while also addressing 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. It also affirms our broader vision to make Nigeria the premier destination for upstream investment in Africa.

“Importantly, the PSC sets out clear terms and conditions to guide this partnership. These include the payment of a signature bonus as stipulated in the licensing round and production bonuses tied to commercial milestones, ensuring value to the Federation; A defined minimum work programme, with the requirement to provide guarantees to assure performance.

“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 noted.

Komolafe further expressed confidence in TotalEnergies and its partners to honour the agreement within the stipulated timelines, ensuring mutual benefits for Nigeria.

Meanwhile, the NNPC Limited’s Group CEO, Bayo Ojulari, described the deal as the first deepwater PSC since the PIA and the first to cover both crude oil and gas.

He said it features a $10m signature bonus, production bonuses tied to output milestones, and a 70% cost recovery limit.

“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.

“We are very proud for that achievement. The PSC is properly framed to reflect the nuances of the PIA, the robust multifaceted role of the Commission, the governance and oversight of the concessionaire, and the obligations of the contractor to conduct offshore petroleum operation in a responsible manner with guidance and significant value delivery to the Federation.

“The PSC has robust fiscal terms. One, a signature bonus of $10m, production bonus of two million barrels, and four million or cash equivalent on attainment of 35 million barrels and 100 million barrels production respectively. So there is an incentive for performance, which we think is very significant. 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,” he stated.

TotalEnergies’ Country Chair in Nigeria, Matthieu Bouyer, reaffirmed the company’s strong 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.