Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke

October 24, 2012

An oil exploration bidding round will be held before the end of the year, while licence renewal talks with Shell and Chevron over existing onshore fields are in their final stages, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has said.

The licensing round is coming five years after the last one held in 2007 by the administration of former President Olusegun Obasanjo.

Obasanjo also held oil licensing rounds in 2000 and 2003.

Nigeria, Africa’s biggest oil producer, exports over two million barrels per day and also holds the world’s ninth largest gas reserves of 182.75 trillion cubic feet, which are largely untapped.

The Federal Government also hopes to increase oil reserves to 40 billion barrels by 2020, from the current 36.2 billion barrels.

The country’s light, low sulphur crude oil is popular with United States and Asian buyers, but oil majors said uncertainty over changes in regulation in the Petroleum Industry Bill and insecurity in the onshore Niger Delta were holding back new investments.

“We expect within the next couple of months a marginal bid round will be announced. We hope a major bid round will follow before the end of the year,” Alison-Madueke told Reuters in an interview.

“Shell and Chevron (onshore licence renewals) are … in the final stages now, those will definitely be out before the end of the year,” she added.

Exxon Mobil signed 20-year oil licence renewals on Nigerian onshore assets, producing around 550,000 barrels per day in February, but other oil majors are still negotiating terms with the government.

Some industry experts have questioned why licences are being renewed before the National Assembly has passed the Petroleum Industry Bill, which will adjust terms on these types of contracts.

“It would have become slightly cumbersome to keep waiting on the PIB before the renewals,” Alison-Madueke said in reply.

The National Assembly is currently debating the PIB, a wide-ranging law that has been delayed for more than five years on disputes between oil firms and different arms of government.

If it becomes law, the bill should end years of regulatory uncertainty that has blocked billions of dollars of investment.

Foreign oil majors, including Shell and Exxon, have said the tax terms in the current version of the PIB would make exploration in the deep offshore, which is the key to growing Nigeria’s oil and gas output and reserves, non-viable.

“I think it is very difficult in general if you have been receiving a certain level of profit over quite a long period of time, to adjust to a slightly lower level of profitability,” Alison-Madueke said of the oil majors’ complaints.

“We went over these terms several times … we kept ourselves competitive,” she added.

The minister said after the changes were made in the PIB, the “government’s take” on offshore projects would increase by 10 per cent to 73 per cent, lower than in rival producers Angola, Norway and Indonesia.

The PIB is meant to overhaul everything from fiscal terms to the Nigerian National Petroleum Corporation.


Punch Nigeria: http://www.punchng.com/news/oil-licensing-round-to-hold-year-end-alison-madueke/