Nigeria seek to reverse falling crude production as oil major renews deep-water oil licenses and contracts

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Oil major, ExxonMobil Corp. has renewed two deepwater leases in Nigeria for 20 years, among the first permits granted under the country’s new oil and gas law.

The U.S. energy giant extended its rights over two oil blocks at a ceremony on Friday in Abuja. It also renewed production-sharing contracts with the Nigerian National Petroleum Company, Limited(NNPC).

“We are pleased to announce the renewals of our OMLs 133 (Erha) and 138 (Usan) deepwater leases for a further 20–year period. This includes extensions of Production Sharing Contracts with our partner NNPC Limited

The permits for the so-called Oil Mining Leases 133 and 138 were due to expire in 2026 and 2027, but were renewed early under sweeping legislation passed last year known as the Petroleum Industry Act. The licenses contain deep-water fields from which the Nigerian government is eager to extract more oil and gas.

“These extensions enable us and our partners to unlock the potential value in these OMLs and to bring forward additional investment,” ExxonMobil said.

Three other deep-water leases were renewed at the same ceremony in “a major step” toward boosting production, the NNPC said on its Twitter account.

The sale is also opposed by state firm NNPC Limited, which argues it has pre-emptive rights to the assets.

Under the Petroleum Industry Act, which was passed last year after nearly two decades in the making, a holder of a petroleum exploration licence cannot “transfer his licence or any right, power or interest without prior written consent of the commission.”

The law also says “where the consent of the minister is granted in respect of the application for a transfer, the commission shall promptly record the transfer in the appropriate register.”

It is not clear if the petroleum minister’s consent can override an objection from the commission.

Oil majors operating in Nigeria, including Shell and TotalEnergies want to exit shallow water operations, citing concern over disruptions by local communities and focus on deep water drilling.

Nigeria’s oil production output has been declining consistently over the past 18 months, with the government blaming rampant theft from the onshore pipelines that crisscross the Niger Delta.

Other companies with interests in the five extended licenses and production-sharing contracts include Chevron Corp., Equinor ASA, Total Energies SE, Shell Plc and Cnooc Ltd.