Oil bidding round in the Nigerian oil and gas industry, which was last held in 2007, is seen in many quarters as long overdue but there is a widespread notion that no fresh bid round can take place until the long-delayed Petroleum Industry Bill (PIB), a key legislation aimed at overhauling the industry, is passed by the National Assembly.
Dieziani Allison-Madueke, petroleum minister was reported to have said in December last year that a marginal field bidding round would be held before the end of the year while speaking on the sidelines of the annual Nigerian Economic Summit in Abuja. But it was not be.
The need for a new oil bidding round was brought to the fore at the 6th annual international conference of the Nigerian Association for Energy Economics held on Monday.
Philip Asiodu, former chief economic adviser, who spoke at the conference with the theme ‘Energy Resource Management in a Federal System: Challenges, Constraints and Strategies’, indicated that the delay in auctioning new oil concessions was unnecessary.
The former Federal minister of petroleum noted that there was a suggestion in some government circles that decisions on auctioning of concession blocks, renewal of Oil Mining Licences (OML), etc must await the passage of the PIB.
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“This is a wrong approach,” he said, adding that “No one knows when the PIB will become law. There are many good things similar to the intentions of PIB which can be accomplished negotiating and acting within existing laws.”
Per Magnus Nysveen, partner and head of data analysis, Rystad Energy, had recently told BusinessDay that some of the challenges facing the Nigerian oil and gas industry include the delay in the passage of the Petroleum Industry Bill (PIB), which he said had taken too long.
“Also, it is a problem that there have not been a new licensing round, that is exploration licences. It has taken too long a time now to get new licences out. To ensure that production in the long term is stable, you always have to at least every second year come out with new opportunities for explorationists,” he added.
Asiodu also noted that there have been new discoveries in West Africa and elsewhere in Africa, against which Nigeria must compete as the new entrants would be eager for development and would offer attractive terms and incentives.
Angola, Africa’s second largest oil producer, which recently announced that it would hold bidding for its onshore oil blocks, is working aggressively to ramp up its crude oil production to 2 million barrels per day in 2015 from around 1.75 bpd last year towards overtaking Nigeria again to become the continent’s largest oil producer.
The PIB has been in the works for about five years because of disagreements between government, oil majors, and lawmakers.
The repackaged version of the PIB, which was sent to the National Assembly in July last year, recently scaled the second reading and is currently being considered by the relevant committees.
When passed into law, the bill will replace all existing oil and gas legislation in Nigeria; revise the fiscal regime for onshore, shallow water, and deepwater oil and gas production and change the provisions for awarding, renewing, and revoking licenses and leases.
