NNPC Limited announced on Monday that it has finalized a deal with its Joint Venture (JV) partner, Chevron Nigeria Ltd (CNL), to convert five of its JV assets into terms compliant with the Petroleum Industry Act (PIA).
The agreement is seen as a significant move to increase crude oil production, with both partners targeting a production of 165,000 barrels of oil per day (bopd) by the end of 2024.
Chief Corporate Communications Officer, Olufemi Soneye, highlighted in a statement that the agreement aligns with the 2021 PIA provisions, which mandate the transition of assets from the Petroleum Profit Tax (PPT) system into PIA terms.
He explained, “Under the new PIA regime, all existing Oil Prospecting Licenses (OPLs) and Oil Mining Leases (OMLs) will automatically be converted to Petroleum Prospecting Licenses (PPLs) and Petroleum Mining Leases (PMLs) upon their expiration.” The PIA terms, he added, are seen as more investor-friendly compared to the previous PPTA system.
Soneye further stated, “An option for voluntary conversion is available for holders of OPLs and OMLs under the erstwhile PPT regime.”
At the signing ceremony at the NNPC Towers, the two companies agreed to convert five OMLs into four PPLs and 26 PMLs, which is expected to enhance domestic gas supply and expand their global market presence.
NNPC Ltd’s Group CEO, Mele Kyari, commended Chevron as a reliable partner, remarking, “Over the years, Chevron has been a partner of choice that has not contemplated completely divesting/exiting (oil production in) the shallow water, and we are proud of them.”
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He assured that NNPC Ltd would continue to strengthen its partnership with CNL to create more value and expand Nigeria’s reach in both the domestic and export gas markets.
Kyari also expressed gratitude to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) for its role in facilitating the conversion process.
Michelle Pflueger, Director of Deepwater and Production Sharing Contract at Chevron, emphasized the importance of the conversion for both companies and reaffirmed CNL’s commitment to its Nigerian assets.
“This conversion represents a key milestone in our long-term partnership with NNPC,” she said.
Additionally, NNPC Ltd’s Executive Vice President, Upstream, Mrs. Oritsemeyiwa Eyesan, highlighted the benefits of the PIA terms over the previous PPT system.
She noted that the conversion was a strategic move that would aid in the effective implementation of the PIA.
NNPC Ltd’s Chief Upstream Investment Officer, Bala Wunti, confirmed that the conversion would substantially boost crude oil production, with a focus on achieving the target of 165,000 bopd by the end of 2024.
