Nigeria has signed a groundbreaking production-sharing contract (PSC) with French energy giant TotalEnergies and local partner South Atlantic Petroleum (Sapetro) for two offshore blocks in what marks the first deepwater agreement finalized under the country’s transformative Petroleum Industry Act (PIA) 2021. The contract, signed Monday in Abuja, covers petroleum prospecting licences 2000 and 2001, spanning approximately 2,000 square kilometers in the prolific Niger Delta Basin.
The landmark deal represents a significant milestone for Nigeria’s oil sector, with TotalEnergies holding an 80% contractor interest while Sapetro maintains a 20% stake. According to Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), this PSC signals Nigeria’s commitment to unlocking untapped deepwater assets, expanding reserves, and strengthening energy security.
Nigeria’s oil and gas sector has experienced remarkable momentum, with the sector index delivering a 160% year-to-date gain in 2024, outpacing its impressive 125% rise in 2023. This bullish performance reflects growing investor confidence following strategic reforms under President Bola Tinubu’s administration, including fuel subsidy removal and downstream deregulation.
The contract introduces innovative fiscal terms designed to attract investment while maximizing returns for Nigeria. Key provisions include a $10 million signature bonus, production bonuses of 2 million barrels at 35 million barrels cumulative production and 4 million barrels at 100 million barrels production, along with robust profit-sharing mechanisms. Bashir Ojulari, Group Chief Executive Officer of Nigerian National Petroleum Company Limited, emphasized that this represents the first contract with comprehensive gas terms, including profit gas splits that incentivize monetization of non-associated gas.
Strategic Reforms Drive Investment Renaissance
The successful completion of this contract underscores the effectiveness of Nigeria’s 2024 licensing round, the first to be officially conducted under the regulatory framework established by the PIA. The transparent, competitive bidding process attracted significant interest from both domestic and international players, with indigenous oil companies aggressively participating and outbidding some national and international players.
Nigeria’s oil production has shown steady improvement, rising from approximately 1.3 million barrels per day to 1.745 million barrels per day as of the most recent NUPRC data. This upward trajectory supports the country’s ambitious target of reaching 3 million barrels per day and attracting $60 billion in additional investment by 2030.
The contract incorporates critical environmental safeguards, including provisions for associated and non-associated gas treatment to ensure optimal utilization and reduced flaring, aligning with Nigeria’s gas commercialization agenda. Environmental protection measures encompass decommissioning and abandonment obligations, along with environmental remediation fund requirements.
Matthieu Bouyer, Managing Director of TotalEnergies Upstream Companies, noted that the blocks align perfectly with the company’s exploration strategy focused on drill-ready, high-impact prospects. TotalEnergies has maintained a strong presence in Nigeria for over 60 years, currently producing 209,000 barrels of oil equivalent per day in 2024. The company’s commitment extends beyond exploration, with TotalEnergies achieving zero routine flaring across all operated assets in Nigeria, becoming the first major operator to accomplish this milestone.
Market Dynamics Signal Sector Transformation
The agreement comes amid a broader transformation in Nigeria’s upstream sector, characterized by increasing participation of indigenous energy companies and successful divestment deals by international oil companies. This shift aligns with global trends seeing up to 70% of wells drilled in Africa occurring in frontier and emerging basins.
Industry analysts project continued growth momentum for West Africa’s oil and gas upstream market, with a compound annual growth rate exceeding 6.50% from 2025 to 2033. The region benefits from substantial untapped reserves, ongoing exploration activities, and strategic importance as a global energy supplier, with Nigeria dominating market share due to its largest reserves and production capacity.
The Africa oilfield services market is estimated at $6.38 billion in 2025 and expected to reach $8.93 billion by 2030, driven largely by increasing development of offshore fields. The offshore segment is emerging as the fastest-growing segment, fueled by significant discoveries in countries like Nigeria and technological advancements in deepwater operations.
Chukwuemeke Anagbogu, Managing Director of South Atlantic Petroleum (Sapetro), emphasized that these new assets provide a clear path to increasing reserve base and ensuring longer-term production growth as current production assets mature. The partnership represents a transformative step forward, contributing to value creation for shareholders, stakeholders, and the nation.
The contract signing reinforces Nigeria’s position as a leading destination for deepwater exploration investments, building on successful completion of major projects like the Egina field, which represents one of the deepest offshore projects ever operated by TotalEnergies. With water depths ranging from 1,400 to 1,700 meters, such projects demonstrate the technical capabilities and investment climate necessary to unlock Nigeria’s vast offshore potential.