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NUPRC expands oil blocs in 2024 licensing bid round

.As stakeholders loud PIA, says  Executive Order ll' stimulate competition

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UGO AMADI

 

The Nigerian energy sector is a verge of experiencing greater dimension with renewed strategy that is being deployed in the forthcoming oil block licencing bid round scheduled to begin very soon.

 

Delivering his address to stakeholders  at the Pre-Bid Conference for 2024 Licensing Round hosted by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in Lagos, the Commission Chief Executive, Gbenga Komolafe, an engineer, was emphatic that prospective licence winners must be genuine investors who are ready to invest and operate oil blocks won within a limited time frame to be specified by the

 

He affirmed that the objectives of this year’s exercise are to grow oil, gas reserves, to boost production, to enhance Nigerian content development and attract investment among others. This is a sharp contrast to what obtains previously when licencees after obtaining the licence opt to trade it off to other, who subsequently are not capable of operating the blocks.

He further said in the Licensing Round exercise, the NUPRC, in collaboration with the National Data Repository and multi-client partners, guarantees access  to comprehensive and high-quality geological data, facilitating informed decision-making and strategic investments.

According to him ‘The blocks on offer have extensive 2D and 3D seismic data coverage, including multi-beam and analog data. Additionally, a 3D reprocessed Pre-stack Time Migration of remarkable quality is also available to prospective bidders.”

The availability of advanced seismic datasets and analytical tools via our dedicated portals exemplifies our commitment to excellence and technological advancement,” he said.

As against a previously announced 12 blocks on offer in the bid round, the Commission announced that it has also placed more oil blocks on sale following the acquisition of more geological data resulting in the identification of more prospective blocks- a feat it was able to attain in partnership with its multi-client partners.

“The newly identified blocks will be added to the pool of blocks originally scheduled for the bid exercise and their details will be made available on the bid round portal. In addition to these blocks, the seven deep offshore blocks from the 2022 Mini-Bid Round Exercise which cover an area of approximately 6,700 km2 in water depths of 1,150m to 3,100m shall also be concluded along with this licensing round,” the CCE explained.

 

Komolafe, who expressed the Commission’s determination to conduct the bid round in a transparent manner in accordance with Section 76 (1) of the Petroleum Industry Act (PIA) 2021, said each bloc has been chosen for its potential to bolster the nation’s reserve and economic posterity, adding that as at last April, Nigeria’s oil reserve stood at 37.5 billion barrels of oil and 209 trillion cubic feet (tcf) of gas.

“We are not just a regulator, but a business enabler. This bid round will enable us an unprecedented opportunity to unlock Nigeria’s vast hydrocarbon potential, attract investment and propel our nation towards greater economic prosperity and shared prosperity,” he stated.

The NUPRC helmsman therefore called on investors to trust their investments in the Nigerian oil sector because it is cheaper for them to conduct exploration and production to produce oil in the country because of the depth of the oil wells.

 

He further explained that Nigeria remains an investment haven and a destination of first choice for investors because the nation has a stable democracy; blessed with a good location that is close to the coast line stretching of 900 kilometers; ease of access to the Europe, American market; attractive fiscal regime; effective regulatory regime; presence of International Oil Companies (IOCs) with confidence in Nigeria; ease of discovery of oil and high prospect, among others.

“The 2024 Oil Block Licensing Bid Round is not merely a transactional opportunity, but a testament to Nigeria’s commitment to advancing a resilient and sustainable industry. This is why stakeholders in the industry should collaborate in other to harness the opportunities that promise not only to meet the immediate needs of the country’s growing economies but also to secure a sustainable future for the next generations for shared prosperity,” Komolafe urged.

He explained that the recent Presidential Executive Orders issued in March aimed at improving the efficiency and attractiveness of Nigeria’s oil and gas sector, were generously targeted to incentivise oil and gas development and also introduced measures to balance the implementation of Nigerian Oil and Gas Industry Content Development Act, 2010, to ensure that oil and gas development is not hindered by local content bottlenecks.

 

The Executive Orders also include directives on reduction of contracting costs and timelines to enhance global competitiveness of our oil and gas industry and achieving higher rate of return on oil and gas investments.

 

This perhaps explains the reduction of signature bonus for this year’s edition. According to Komolafe, a review of Welligence Energy Analytics reports on Licensing round across the globe including Brazil, Guyana, Angola, Middle East, North Africa, SouthEast Asia etc, revealed that the era of huge front-loaded signature bonuses is over.

 

Arising from this study, he said, emphasis shifted from high signature to production bonus and commitment to work programme ahead of entry signature fees which has now been reduced to a token in order to vacate entry barriers in alignment with the agenda of President Bola Tinubu’s administration to shore up production output and attract more investors into the sector.

 

This, he said, is to serve as incentives to potential block winners as the savings from the reduction will enable a winner plough the extra into its capital expenditure and stimulate them to begin immediate exploration activities of blocks won.

 

He said: “The reduction in signature bonus was done after an extensive study which showed that Nigeria charged the highest signature bonus in the world. This, we realised does not allow for immediate operations of the well so won.”

 

Komolafe noted that with the stiff global competition in the sector, and the increasing challenge of raising funds for investment in fossil fuel due to the fast unfolding switch to greener energy, it is only reasonable to reduce such payments.

 

At the event, the Executive Director, Schlumberger, Nosa Omorodion noted that given the position and regulations of government through the NUPRC, it presents “an opportunity for NUPRC to demonstrate that Nigeria is ready for business.” He said integrity is important and ensuring that things are done according to the rules, adding that corporate governance and competency are key. He advised that the new oil bloc that would be placed should be published and made open for perspectives investors to see.

Similarly, the Gas and Commercial Director, Shell E&P Africa, Hans Nijkamp, said: “Shell has been in Nigeria since 1937 and we are ready to stay for a very long time,” Noting that the deep water is the company’s ‘playground’ for the future, Hans said Nigeria is currently on track saying that the fiscal regulatory framework makes it look like Nigeria is already in the future. He added that the company is determined to focus on oil and gas in the deepwater and taking the gas to the domestic market through the NLNG.

 

According to him, the PIA is a groundbreaking moment, as it has improved things significantly in the sector.  “The PIA and the Executive Order signed by Mr President together makes Nigeria more competitive,” he said.

 

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