NNPC SIGNING NEW GENERATION OF LAND, DEEPWATER CONTRACTS

Nigerian National Petroleum Corp. has signed a new type of contract with individual companies covering land and deepwater offshore blocks. NNPC signed contracts separately with newly formed Shell Nigeria Exploration & Production Co. Ltd. (Snepco), London, and Elf Petroleum Nigeria, Paris. A Shell spokesman said the new contracts involve NNPC and one foreign partner rather than NNPC and a number of foreign partners with minority interests. Foreign partners are expected to pay exploration costs,

May 17, 1993

3 min read

Nigerian National Petroleum Corp. has signed a new type of contract with individual companies covering land and deepwater offshore blocks.

NNPC signed contracts separately with newly formed Shell Nigeria Exploration & Production Co. Ltd. (Snepco), London, and Elf Petroleum Nigeria, Paris.

A Shell spokesman said the new contracts involve NNPC and one foreign partner rather than NNPC and a number of foreign partners with minority interests.

Foreign partners are expected to pay exploration costs, which can be recovered, if production begins, under a sliding scale arrangement.

London's Financial Times said similar deals are expected soon between NNPC and Mobil Corp., Chevron Corp., Agip SpA, and British Petroleum Co. plc and Den norske stats oljeselskap AS in alliance.

SHELL, ELF PACTS

Contracts NNPC signed with Snepco allow 10 years' exploration and 20 years of production on deepwater offshore Blocks 212 and 219 and onshore Blocks 803, 806, and 809 in the Benue basin.

Snepco said it will begin exploration as soon as possible, in line with its commitment to the government to help boost Nigeria's reserves to 25 billion bbl by 1995. Nigerian reserves were estimated at 17.9 billion bbl in 1991.

Blocks 212 and 219 cover 900 and 715 sq miles, respectively, about 40 miles offshore in 650-4,900 ft of water. Snepco paid a signature bonus of $30 million on each block and is committed to seismic surveys and drilling.

Blocks 803, 806, and 809 each cover 965 sq miles, and are 450, 420, and 385 miles inland, respectively. All carry seismic survey and drilling commitments. Block 803 required a $500,000 signature bonus and the other two required $700,000 each.

Snepco is a new company set up to explore and produce from Nigeria's frontier areas.

Elf Petroleum Nigeria signed exploration and production sharing contracts covering two blocks in 200-1,000 m of water. The blocks are south of Elf operated OML 100 permit.

Elf also signed contracts covering three onshore blocks in the Benue basin.

Elf started oil production on the OML 100 permit with Afia and Odudu fields in March 1993. The two fields are the first to be placed on production on the permit, and two other fields are to start up by January 1994.

Nigeria plans to raise average production to 2.5 million b/d by the year 2000 (OGJ, Apr. 19, Newsletter). In 1991 total production in Nigeria averaged 1.867 million b/d, of which Shell contributed an average 287,000 b/d.