Nigeria Begins Oil Bloc Bid Rounds In May. Investors begin scheming, meeting in Abuja, London, Houston as the Nigerian government has picked May for the commencement of a new licensing round for awarding oil blocs and allocation of marginal fields.
A memo of the Ministry of Petroleum Resources sighted by this newspaper, revealed that the minister, Dr. Emmanuel Kachikwu, settled for May as a desirable period to begin the process. Although he had earlier announced the plan for the bid round, this is the first time a date is being given for the commencement of the programme.
The memo stated:
“This bid round, which is a part of plans for petroleum industry under current fiscal year, is expected to commence in April, late est May, as announced by the honourable Minister of State for Petroleum Resources.”
A management staff of one of the International Oil Companies (IOCs) said after his anonymity was assured:
“The scheming for the bid round has started in earnest. Series of meetings are already taking place in Abuja, London, Houston and other parts of the West for the bid round,” His company volunteered two of its matured blocs to the government for the bid round. Kachikwu had said at the programme, televised for viewers all over the world, that marginal field is a recurring thing and that the country would begin another one hopeful April, or May of this year.”
Investors and Risk Managers for the oil and gas portfolios in financial and technical institutions are aware of the date. Aside from the bid round date, the ministry, the memo stated, is also making moves to reduce petrol consumption in Nigeria from an estimated 50 million to 28 million litres daily, thereby saving about N3.2 billion daily from unaccounted volumes.
Licensing rounds are a veritable avenue to raise quick funds for the government, which award a large expanse of land/oil bloc to exploration and production companies, while also expanding the country’s production capacities.
The last administration had tried to execute a licensing round, but could not pull it off due to lack of confidence in the process, as it was feared that the oil bloc usually awarded to oil drilling and exploration companies would end up in the hands of political cronies, who will go hawking it.
If the plan works, the country will be on the way to meeting new production targets of 4 million barrels daily and 40 billion oil reserves, which it had consistently missed since 2010.
The Federal Government has, in the same vein, begun plot to end the $90 billion investments revenues’ deficit rocking Nigeria’s oil and gas industry. The revenues’ deficits rocking the country would be tamed with clarity of contract terms through passage of law on oil industry governance presently before the National Assembly, Kachikwu said.
While he also noted that the country targets $10 billion to meet up the investments shortfall in gas sector, the minister maintained that measures are in place to address this anomaly.
“Measures are in place and they will be thoroughly deployed immediately the issue of legislation on governance issues of the oil and gas industry are addressed,” he said.
Meanwhile, IOCs have stated that the Federal Government had bad feeling over litigation they have against it in court. Country Chair of Shell Companies in Nigeria, Osagie Osunbor, who stated this on the sideline of a conference in Abuja, maintained that litigation is commonplace among IOCs who are in partnership.
Chairman and Managing Director, Chevron Nigeria Ltd, Jeff Ewing, corroborated this view just as Country Chair, Shell Companies in Nigeria and Managing Director, SPDC, Osagie Okunbor, added that IOCs also seek redress among one another on grey areas of contracts. “We (IOC) are competitors, but we are partners when it comes to cost,” he said.
Suggesting that the crude price rout made seeking clarity in grey areas of contracts necessary, Okunbor said: “When oil price was $100 and above, we all were behaving like drunk people, we cannot now do it.”
Reacting to the IOCs on court cases over alleged breach of contractual agreement, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, said that it was difficult to treat all IOCs equally.
Represented by Group Executive Director, Exploration & Production, Saidu Muhammed, Baru stated that this was responsible for the perspective that NNPC as a partner acts like a regulator and government. Stating that the NNPC has, despite this, forged ahead with programmes such as exit from Joint Ventures (JV) contracts with IOCs, Baru maintained that government still bears the brunt of its shares in the JV cash call.