Offshore Nigeria Deal May Lead to $10B+ Investment

Offshore Nigeria Deal May Lead to $10B+ Investment
NNPC concluded agreements with Shell, ExxonMobil, Total, and Eni to create a new production sharing contract.

(Bloomberg) -- Nigeria signed an accord with some of the world’s largest oil companies that could unlock billions of dollars of investment in an offshore oil field.

The Nigerian National Petroleum Corp. concluded agreements on Tuesday with Royal Dutch Shell Plc, Exxon Mobil Corp., Total SA and Eni SpA to create a new production sharing contract for Oil Mining Lease 118, the company said on Twitter. The permit includes Bonga, a deep-water oil field that pumped about 90,000 barrels a day in February.

The partners have so far deferred taking a final investment decision on the Bonga South West project, which could add 150,000 barrels per day to Nigeria’s output and bring OML 118‘s total daily capacity to around 350,000 barrels. One of Shell’s Nigerian subsidiaries operates the block.

The agreement is “a watershed” for deep-water oil exploration in Nigeria and settles long-running disputes between the Nigerian state and the international oil companies, NNPC said. It could clear the way for more than $10 billion of investment, according to the company.

“Through these agreements, stakeholders will have clear and stable set of terms incentivizing further development of the OML 118 block and opening further opportunities in the prolific Nigerian deep water oil and gas industry,” a Shell spokesman said by email.

In a separate investor presentation on Tuesday, Shell said it has three projects related to Bonga that are in development but haven’t yet been given the green light -- Bonga South West, North Tranche 1 and Main Life Extension and Upgrade.

--With assistance from Laura Hurst and Julian Lee.

© 2021 Bloomberg L.P.



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