By Teddy Nwanunobi
The Federal Government has expressed confidence that Nigeria’s economy would reap so much value from the new deal the Nigerian National Petroleum Corporation (NNPC) entered into with its partner, Sterling Oil Exploration and Production Company (SEEPCO), on the Oil Mining Lease (OML) 143 Gas Development Agreement (GDA).
Valuechain reports that NNPC and SEEPCO, on Thursday, April 22, in Abuja, signed a GDA.
“This latest milestone provides the terms for the development of OML 143 Gas, providing gas for the domestic market which aligns perfectly with the Federal Government’s National Gas Expansion Programme (#NGEP). #DecadeofGas,” NNPC tweeted to announce the deal.
The project, the NNPC Group Managing Director (GMD), Mallam Mele Kyari, said, would also boost the nation’s gas production by 1.2 trillion cubic feet (tcf).
Kyari said the gas commercialisation strategy of the corporation was in sync with the Federal Government’s National Gas Expansion Programme (NGEP).
He added that the gas from the project would be processed at the Ashtavinayak Hydrocarbon Limited (AHL) 125 million standard cubic feet (mmscf) of gas per day gas plant located in Kwale, Delta State.
“We are happy that this will unlock significant volumes of gas which will deliver 125mmscfd to the midstream plant that you have built.
“Of course, this is a great milestone for us and we are happy to do business with you. You are a very reliable partner because when you say things, you get them done,” Kyari stated.
Mr. Tony Chukwueke, the Group Managing Director of SEEPCO, on his part, said the OML 143 GDA is a major milestone for the country, because it was the first agreement in Nigeria that fully separates gas development from oil production.
He noted that the arrangement would enable holistic development of the gas potential in the bloc.
He further explained that the GDA was a significant step as it was the first of its kind to expressly include terms that encourage the contractor to be effective in its cost management thereby passing on significant revenue to the Federal Government, NNPC and other stakeholders.
“I will like to take this opportunity to thank the GMD, NNPC for his contribution to Nigeria and also recommit that SEEPCO is determined to play its role in the energy industry in Nigeria,” Chukwueke reassured.
The GDA is required, pursuant to the Production Sharing Contract obligations, to set out the terms for the development of the 1.2tcf Non-Associated Gas oil bloc by SEEPCO, which is the contractor with the NNPC is the concessionaire.
The additional gas supply from the project would raise the nation’s gas production profile, make dry gas available for the proposed 650 megawatts NNPC/SEEPCO Independent Power Plant, boost in-country supply of Liquefied Petroleum Gas (LPG) and general domestic gas utilisation, increase energy security, and create job opportunities for Nigerians.
Valuechain recalls that both parties had, on September 26, 2020, signed an agreement for the development and commercialisation of gas from the OML 143.
According to a statement signed by the Group General Manager (GGM), Group Public Affairs Division, then, the NNPC said that the agreement would help reduce gas flaring in the country.
Kyari, in the statement, was also quoted as saying that the execution of the deal was a great milestone and a testament to NNPC’s commitment to facilitating the nation’s transformation into a gas-powered economy.
“The deal will not only help reduce gas flaring and its environmental hazards, but will also promote gas production and utilisation in the domestic market,” it said.