As the global industry continues to cope with one of the worst downturns in recent history, some African countries have seen substantial growth with new hydrocarbon discoveries and licensing rounds but uncertainty around fiscal terms and the slow progress in implementing key oil and gas laws continues to be the major handbrake on Nigeria’s oil sector growth.

The Nigerian Association of Petroleum and Explorations (NAPE) argue that the hunt for hydrocarbons continues to be hampered by regulatory uncertainty and delays in passing specifically, the Petroleum Industry Bill (PIB).

Countries normally issue oil licenses granting companies rights to search for commercially feasible oil deposits for extraction in what is typically called a licensing round. Awarding oil licenses are necessary for the government to raise revenues, meet production targets and increase oil reserves.

Hopes that Nigeria would hold any licensing round for oil blocks this year are still slim even as about 11 licenses are said to be expiring this year while some have since expired, according to concession report by the Department of Petroleum Resources (DPR), with little public disclosure about their renewal.

The government had in November 2013 flagged off a marginal fields licensing round. The competitive bid round which was expected to be completed by March 2014, failed to meet the deadline after many other cancellations and postponements of the exercise in the past. Three years after the announcement, the bid round is yet to hold, with the failure of the bid linked to the delay in passing the PIB.

Nigeria currently holds the largest oil and gas reserves in sub-Saharan Africa and is the 9th largest reserve in the world with an estimated 37 billion barrels of oil and 188 trillion cubic feet of gas.

Few decades ago, only a handful of African countries bore the title of oil producing nation. Today, more than two dozen African countries have either found oil on their territories or have begun production in commercial quantity.

Amid the volatility of the price of oil the industry in Africa continues to witness more activity driven by licensing rounds, big capital investments, mergers and acquisitions.

Recent exploration successes (in Egypt, Senegal), perceived stability in operating environments (Mauritania, Morocco, Ghana) and a return of confidence in established producing provinces in West Africa (Gabon, Equatorial Guinea) are opening up these countries for investments. All these have grave consequences for Nigeria’s positioning in the global energy market.

UK statistic agency, GlobalData, listed a total of nine petroleum licensing rounds in the world that are due to close this year of which two are in Africa specifically Congo Republic, Egypt while Nigeria was not mentioned.

A total of five bidding rounds closed in 2016, according to GlobalData’s report with Equatorial Guinea’s 2016 Licensing Round leading the African continent.

In response to a wave of new exploration interest, ongoing efforts to further explore its offshore territory and revive the country’s energy sector, Equatorial Guinea late 2016 launched its licensing round and only last month announced successful bidders.

In terms of acreage, the country’s licensing round offered the highest among all rounds in the word. Three major oil firms, ExxonMobil, Ophir and Nigerian energy group Taleveras, won oil blocks in the country. The West African nation’s competitive bidding round was declared a success by industry analyst and watchers.

The Republic of Congo is another country that has gone ahead to launch an aggressive onshore-offshore licensing round to grow its oil reserves. The country is the fourth largest Sub-Saharan producer of oil, with an output of 277,000 barrels of oil per day (bpd), according to BP statistics, its proven oil reserves amounted to 1.6 billion barrels in 2015. Congo-Brazzaville is even expected to leapfrog Equatorial Guinea and become the third-largest producer in the region, largely due to a $10-billion Total E&P Moho Nord project, the largest oil project in the country’s history launched in 2013 with potential to increase Congo’s production by 50 per cent in 2017.

The country’s state oil company SNPC finally launched an onshore-offshore licensing round last year although pending passage of the country’s new oil legislative framework. Thirteen production sharing licences are on offer, comprising eight offshore and five onshore blocks. The offer date has since closed with bids processes expected to be completed by the end the year.

Egypt, North Africa region’s oldest upstream sectors, continues to attract new interest with a spate of recently-announced deals despite the impact on investment by slowing oil prices over the past five years

Shell had last year announced 142 billion cubic meters of natural gas discovery in Egypt’s Western Desert, with the possibility of more reserves to be recovered, representing one of the largest finds in the region in recent years. This follows another discovery by the Egyptian General Petroleum Corporation (EGPC) last year that could yield 2.2 million barrels of oil and nearly 311.5m cubic meters of gas in the Western Desert, which is already responsible for nearly half of Egypt’s total oil production of 723,000 barrels per day.

The country followed up the discoveries in 2016 with an International Bid Round, in which 11 blocks were offered for oil and gas exploration in the Western Desert and the Gulf of Suez. The bids are worth a total minimum investment of $200 million, $68.2 million signature bonuses and the drilling of 33 exploration wells. Security approvals related to these areas have been finalized although the continuous decline in oil prices has slowed the process.

After fine tuning its petroleum law and working towards ramping up its relationship with investors, Uganda opened its door to more companies following a licensing round that commenced last year.

The country is now set to sign two oil production sharing agreements with companies including a Nigerian firm that won its recent oil block bidding rounds.

This comes after the country held its first competitive oil exploration licensing round last year, with three Nigerian firms getting through to final negotiations for the award.

The enormous discovery of gas at Mozambique’s Rovuma Basin gave the Southern Africa country a strong pedestal major gas hub in Africa. Following the discovery of big natural gas resources, Mozambique launched its oil licensing round after the passage of a new petroleum law that governs oil and gas activities in the country. It became necessary for the country to reform its existing petroleum laws and put in place a comprehensive legal framework and fiscal terms to facilitate development and investments in its oil and gas sector.

Already, there are plans by the country to launch its sixth oil and gas licensing round in late 2017 or in 2018.

Elsewhere, smaller African countries are doing enough to develop their oil reserves. Somalia is expected to launch its oil block bid round this year, its first hydrocarbons bid round with detailed plans, documents and data sets still being awaited.

In readiness for bids, the Somalian government has bolstered the country’s legal and regulatory framework. With assistance from the World Bank, the Petroleum Law has been amended in the wake of the country’s federalisation and drafting is now complete.
https://www.dailytrust.com.ng/news/business/oil-licensing-clock-ticks-on-nigeria-as-e-guinea-others-advance/204628.html