Chevron Nigeria Ltd (CNL) and the Nigerian National Petroleum Company (NNPC) Limited have reached a landmark agreement to convert five oil mining leases (OMLs) into four petroleum prospecting licenses (PPLs) and 26 petroleum mining leases (PMLs). The deal, signed on Monday at the NNPC Towers in Abuja, is part of broader efforts to align with the Petroleum Industry Act (PIA) of 2021, which streamlines the transition of assets from the Petroleum Profit Tax (PPT) regime to PIA terms.
NNPC spokesperson Femi Soneye, who confirmed the development, emphasized the significance of the conversion under the PIA. According to Soneye, all existing oil prospecting licenses (OPLs) and OMLs will automatically convert into PPLs and PMLs upon expiration, with an option for voluntary conversion under the more investor-friendly PIA regime.
At the ceremony, Mele Kyari, Group Chief Executive Officer (GCEO) of NNPC, praised Chevron as a “partner of choice,” emphasizing their dedication to Nigeria’s oil production, particularly in shallow waters. “Chevron has never contemplated fully divesting from Nigeria, which underscores their long-term commitment to our joint venture and national interests,” Kyari said. He also acknowledged the critical role played by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in facilitating the conversion process.
Chevron’s Director of Deepwater and Production Sharing Contracts (PSC), Michelle Pflueger, echoed Kyari’s sentiments, stressing that the conversion represents a strategic step for both companies. “This agreement not only enhances our commitment to these assets but also aligns with Chevron’s broader goal of maximizing Nigeria’s energy potential,” Pflueger remarked.
Oritsemeyiwa Eyesan, NNPC’s Executive Vice President for Upstream, further highlighted that the PIA offers more favorable terms compared to the previous PPT framework, making this conversion beneficial for both stakeholders. “The new terms will drive significant value and set the stage for increased efficiency in managing these assets,” Eyesan noted.
NNPC’s Chief Upstream Investment Officer, Bala Wunti, outlined the operational benefits expected from the conversion, predicting a boost in crude oil production. Wunti revealed that NNPC and Chevron are targeting 165,000 barrels per day (bpd) by the end of 2024. He also stressed Chevron’s critical role in maintaining network stability and ensuring a stable supply of gas to the domestic market.
The PIA introduces new licensing structures such as the Petroleum Exploration License (PEL), PPL, and PML, which replace the older OEL, OPL, and OML frameworks. These new licenses allow companies with non-producing marginal fields to convert them to PPLs, while producing fields are transitioned into PMLs, providing a streamlined approach to exploration, development, and commercial production in Nigeria’s oil and gas sector.
