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Market Digest Nigeria

Economy

NNPC seeks end to litigation, arbitration affecting oil assets

NNPC

The Nigerian National Petroleum Corporation (NNPC) has said the country would bring about amicable end to all litigations and arbitrations that have over the years inhibited the growth of some oil assets.

With a new novation agreement for Oil Mining Leases (OMLs) 60,61, 62 and 63, which are jointly owned with Nigeria Agip Oil Company (NAOC) and Oando, Group Managing Director of the NNPC, Mele Kyari, said the agreement marked a significant milestone in the sector. The state-oil-firm has equally signed the Abo OML 125 Head of Terms Agreement Nigeria Agip Exploration Limited (NAE) in a move aiming at resolving issues, which have lingered in most deep offshore Production Sharing Contracts.

The novation agreement equally signified the transfer of NNPC interest in those assets to the Nigerian Petroleum Development Company (NPDC), which would open up the company to contributing to cash calls and further progress the growth of the partnership, Kyari said. The corporation noted that the development was part of move to boost nation’s crude oil production and well as reserves.

“The Federation divested its interest in the NNPC, NAOC joint ventures and that means we have transferred those interests to the Nigerian Petroleum Development Company (NPDC) in order to grow NPDC, to become a medium size upstream company that the Federation and the NNPC would be proud of. “This is the beginning of greater things to come in the Oil and Gas Industry. We are ready to make sure that NPDC delivers on her mandate of exploration as this is a milestone in our quest to grow reserves”, Kyari said in statement signed Acting Group General Manager, Group Public Affairs Division, Samson Makoji.

With the move, Kyari noted that the partners could be sure of delivery, adding that the agreement would open a new chapter of business for NPDC as well as new source of revenue. With the development on OML 125, the parties could now look forward to the renewal of licence and further investment in exploring and developing Abo field resources, Kyari said. Managing Director of NAOC, Lorenzo Fiorillo, said: “ENI through its Affiliate NAOC, is on record as the first company to produce from the deep offshore in Nigeria”. In a related development, while oil giants are currently under pressure from climate activists to reduce investment in fossil fuel, Kyari, also insisted that fossil fuel would remain relevant in the global energy mix for decades.

Indeed, while fossil fuel investments are becoming a risk for both investors and the planet, Kyari said contrary to assumptions in some quarters, crude oil demand would be very high even beyond 2040. Analyst had said burning fossil fuels emits harmful particulate matter, especially sulphur dioxide (SO2) emissions, into the air and remained a challenge to both the environment and public health. Already some oil giants are divesting into renewable because fossil fuels are a finite resource, as alternatives which are increasingly cheaper are developed. The NNPC GMD made the declaration in his office in Abuja, while receiving members of a Higher Command Course of the Indian Army War College on a geo-strategic tour of Nigeria.

According to Kyari, Nigeria’s crude remains uniqueness with high global demand. He equally said the oil firm would increase production capacity to production to 3million barrels per day by 2023 to enable Nigeria take advantage of the gap that exists in the demand-supply balance. Recognising the age-long bilateral relations between Nigeria and India, which cut across trade, military cooperation and international peace keeping, among others, Kyari stated in statement that NNPC’s mandate cut across satisfying domestic energy needs and contributing to global energy market, especially crude oil and Liquefied Natural Gas (LNG) deliveries across the world.

“Energy security is everything in terms of national security. The recent attack on Saudi oil facility is one incident which has attracted global attention and has the potential to impact global economy,” Kyari stated. In trying to emphasize the relationship between energy security and global security, Kyari said developing nations must strive to grow their respective economies and guarantee their territorial integrity.

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