Nigeria’s oil regulator agency during a speech at a global oil conference in Houston, Texas, announced that the country have open bids for international Investors who have the financial and technical capabilities for 12 onshore and deep water oil blocks. The country, which is Africa’s largest oil producer, initiated this year’s licensing round on April 29 in order to further tap into its estimated resources of 37.5 billion barrels of crude oil and 209.26 trillion cubic feet of Natural Gas reserves. Gbenga Komolaf, Chairman of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), emphasized Nigeria’s dedication to organizing the licensing round in a just, open, and competitive manner, with equal opportunities for both local and foreign investors.
Previous bids have been met with reluctance from some investors because of a lack of transparency in the award process, resulting in companies winning oil fields despite lacking the ability to drill. This has caused concerns about potential cancellations of the awards. Komolafe mentioned that along with these issues, the seven deep offshore blocks from the 2022 mini-bid round will also be finalized as part of this licensing round. Now in 2024, investors will have the opportunity to acquire a total of 19 oil blocks.
Government is anticipating $3b in capital investment.
The regulator emphasized that the bidders’ must align with Nigeria’s net-zero carbon Emissions goals, elimination of gas flares, and protection of rivers and farmlands in addition to their technical and commercial skills. Over the past decade, Nigeria, a member of the Organization of the Petroleum Exporting Countries (OPEC) , has experienced a significant decrease in oil production from 2 million to 1.3 million barrels per day. Major oil companies are shifting their focus from onshore fields vulnerable to sabotage and frequent spill-related compensation claims to deep water fields, where disruptions are not as frequent.
According to Komolafe, the government is anticipating a staggering amount of $3 billion in capital Investment to support initiatives in the Nigerian Gas Flare Commercialisation Programme (NGFCP) and generate 300,000 job opportunities. The commercialization of flare gas could lead to numerous economic and social advantages. This includes providing clean energy to six million households with LPG, reducing carbon dioxide emissions by 20 million tons annually, unlocking 600,000MT of LPG annually, and generating 2.5 GW of power from new and existing IPPs.
NUPRC is establishing rules to foster a favourable investment.
Discussing the current bid round, Komolafe highlighted the availability of six acreages on the continental shelf, four deep offshore blocks, and two onshore blocks in the Niger Delta for green field oil exploration. He noted the Commission’s efforts in establishing regulations to foster a favourable investment atmosphere, which involves ensuring regulatory stability, eliminating entry barriers, and enhancing global competitiveness. He observed that in order to obtain the blocks, investors must meet certain criteria such as technical skills, financial capability, and sustainability.
Komolafe emphasized that the oil licensing rounds aim to improve the quality of data and will be carried out through a fair, transparent, and competitive bidding process without discrimination, as outlined in Sections 3 and 74 of the Petroleum Industry Act (PIA). When questioned about the potential Revenue from the bid rounds, he explained that determining the revenue generated from the bid rounds is challenging due to the nature of the assets being primarily greenfield. Therefore, providing an exact amount may be difficult as a result of their greenfield status.
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Nevertheless, he elaborated that the country stood to make billions in revenue from royalties, taxes, and other fees resulting from the bidding process. Regarding unused oil blocks from previous bid rounds given to investors, Komolafe announced plans to revoke the awards and review these inactive blocks. At this time, the commission is conducting a thorough evaluation of all assets that have been granted. On the other hand, he noted that the NUPRC saw an increase in revenue from ₦2 trillion in 2020 to ₦2.9 trillion in 2021. This figure then rose to ₦3.78 trillion in 2022 and continued to climb to ₦4.34 trillion in 2024.