FG Places $200m Tag For Bidders Of Deep Offshore Oil Fields

The federal government has capped capital outlay for prospective oil field bidders in the 2024 oil bid round.

The benchmarking is to guard against past experiences where portfolio investors would bid for assets without prerequisite requirements and either abandon them or execute through a third party.

For firms bidding for  the deep offshore field should have a capital outlay of $200 million while others will have financial backup of $50 million as a yardstick to bid to ensure investors have the financial resources as well as technical expertise to explore such fields.

Speaking at the 2024 pre-bid conference in Lagos on Tuesday, with the theme, “Unveiling Nigerian Energy Development Strategies: 2024 Licencing Round” commission chief executive of the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, Gbenga Komolafe, said the agency is putting on offer over 12 oil blocks.

Komolafe, said that as at April this year it was confirmed that the country’s is about 37.5 billion barrels and 209 trillion cubic feet of gas, TCF, which shows a monumental untapped resource potential.

He said the assets are located within the offshore, deep offshore and continental shelf, each with high deposit propensity.

The CCE, also announced that the exercise scheduled to last for nine months would see to the completion of seven deep offshore blocks earlier put on sale.

While calling on both local and foreign investors to take advantage of the exercise, Komolafe, reasserted the Commission’s vow to transparently carry out the programme to restore investors confidence.

He added that the federal government has offered magnanimous incentives to woo investors describing Nigeria as a preferred investment destination when it comes to oil and gas business.

He said investors are sure of return on investment following political stability of the country, access to offshore market, attractive jurisdiction and effective regulatory and fiscal regime as well as assurances of ease of doing business and enormous local talent.

Earlier, executive commissioner, Exploration and Acreage Management of the Commission, Bashari Indabawa, said the exercise offers opportunities for companies to secure licences to explore huge opportunities presented by the industry.

LEADERSHIP reports that the federal government had earlier offered 12 oil blocks in a new licensing round.

It plans to complete it in tandem with a previous round for seven blocks that stalled following last year’s change in government.

Komolafe, said data constraints limited the Agency’s capacity when it announced 12 blocks in the new round but was raised when new data offered more opportunities.

The oil blocks were carefully selected to attract international investors with financial resources and technical expertise and are spread across three geological terrains, Komolafe said.

Norwegian geophysical services company PGS, which is providing seismic data support for the licensing round, said two of the blocks on offer are onshore in the Niger delta, six are on the continental shelf and the other four are in deep water.

The round will span nine months and conclude with ministerial consent and contracting in January 2025.

Entry fees Komolafe said are very competitive as part of government measures to support the commercial viability of investments. “The era of front-loaded, huge signature bonuses is over,” he said.

Minister of State for Petroleum, Heineken Lokpobiri echoed Komolafe’s point about minimal barriers to entry but noted that the round is designed to bind successful bidders to strict timelines, suiting investors that are “able to do exploration almost immediately”.

Lokpobiri also revealed that Nigeria plans to award licences for seven offshore blocks offered in a 2022 licensing round in tandem with the 2024 round. “The 19 oil blocks presented for bidding are strictly reserved for capable investors,” he said.

The round for the seven offshore blocks started in December 2022 and had been scheduled to be completed in May 2023. NUPRC said in April last year that the schedule had been pushed back to July because of concerns about concluding “the bid process before transition to the new government”. President Bola Tinubu has set a target to raise Nigeria’s crude production to 2.6mn b/d by 2027.

The country’s current target under the Organization of Petroleum Exporting Countries, OPEC, agreement is just 1.5mn b/d.

Nigeria started an international roadshow for the new licensing round in the US on 7 May in Houston, Texas, as well as Miami, Florida on 14 May.