The Federal Government has formalised a major step forward in its upstream oil and gas strategy, signing a new Production Sharing Contract (PSC) with TotalEnergies and South Atlantic Petroleum (Sapetro) for two high-potential oil blocks in the Niger Delta Basin.
The agreement, sealed on Monday in Abuja, covers Petroleum Prospecting Licences (PPLs) 2000 and 2001, awarded during the 2024 oil licensing round. The two offshore blocks span approximately 2,000 square kilometres, with TotalEnergies holding an 80% operating stake, while Sapetro retains the remaining 20% interest.
Under the terms of the contract, the consortium will pay a $10 million signature bonus, with further production bonuses linked to achieving specific output milestones two million barrels upon reaching 35 million barrels, and another four million barrels or cash equivalent upon hitting 100 million barrels of production.
Speaking at the signing ceremony, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, described the deal as a defining moment for Nigeria’s deepwater development.
“This contract marks a new chapter in our upstream industry,” Komolafe said. “It lays the groundwork for fresh exploration, new investment, and long-term value for Nigeria. We are committed to unlocking the untapped geological potential of our deepwater assets while enhancing energy security.”
The PSC, he noted, is aligned with the provisions of the Petroleum Industry Act (PIA), offering clarity on cost recovery, profit oil, royalties, and obligations to host communities. It also addresses gas utilisation, environmental remediation, and decommissioning responsibilities.
Komolafe credited the signing to ongoing reforms championed by President Bola Tinubu, especially the 2024 Executive Orders on fiscal incentives, local content, and contracting timelines.
“These reforms have been instrumental in attracting credible investors and giving life to previously dormant assets,” he added. “With the President’s approval, we introduced pragmatic measures such as minimum signature bonuses a global best practice seen in countries like Guyana and Brazil to make our investment climate more competitive.”
The PSC signing follows NUPRC’s recent initiative to unlock an additional 810,000 barrels per day from Nigeria’s deepwater fields through a cluster and nodal development strategy.
Also speaking at the event, the Group CEO of the Nigerian National Petroleum Company Limited (NNPC Ltd), Bayo Ojulari, highlighted the PSC’s significance, calling it the first of its kind since the PIA came into force.
“This is a historic contract. It’s the first PSC signed in the deepwater space under the new legal framework. It covers both crude oil and natural gas and includes comprehensive fiscal and performance-based terms,” he said.
According to Ojulari, the PSC provides a 70% cost recovery ceiling, and includes mechanisms to incentivise production and monetisation of non-associated gas a critical growth area for Nigeria’s energy transition.
“The $10 million signature bonus and production bonuses at 35 and 100 million barrels show that this agreement balances value creation for the Federation with solid returns for investors,” he said. “It is a model contract resilient, complete, and reflective of Nigeria’s regulatory vision under the PIA.”
Meanwhile, TotalEnergies Nigeria Country Chair, Matthieu Bouyer, reaffirmed the company’s long-standing commitment to Nigeria, saying the consortium is ready to move swiftly into the development phase.
“With more than 60 years in Nigeria and over 1,800 employees, we remain a strong partner in the country’s energy journey,” Bouyer said. “We’re proud of our track record operating over 400,000 barrels of oil equivalent per day in 2024 and we’re fully committed to executing this new PSC responsibly and efficiently.”
He noted that TotalEnergies will leverage its global expertise and local experience to deliver low-cost, low-emission projects, while creating value for Nigeria and its people.
“We aim to deliver outcomes that support Nigeria’s development goals especially job creation and local content while also contributing to the national target of 3 million barrels per day,” Bouyer added.
With over 500 service stations across Nigeria, TotalEnergies also continues to expand its downstream footprint, underlining its broad-based commitment to the country’s energy landscape.
The NUPRC stated that the PSC reflects its long-term strategy of positioning Nigeria as the most attractive upstream investment destination in Africa, bolstered by transparency, investor confidence, and operational excellence.
