As Nigeria continues to allow investment opportunities in the oil and gas to slip away, more serious countries around the world and the African continent in particular are getting set to ramp up oil bid licensing rounds to enhance their ‘producibility.’
Countries like Angola, Uganda, Sierra Leone and Equatorial Guinea have between September 2019 and February 2020 to finalised arrangements for the bid rounds to take place.
Other countries across the globe, like Brazil and Ukraine, closed their shops to would-be investors between September and October this year, meaning that the real bid round can take place any moment from now.
Relatively unknown countries in terms of oil production in Africa are aggressively turning out policies and incentives that are attractive to investors. Hence, the countries are making waves now in respect of oil production, even though the volumes are small.
But unfortunately for Nigeria, the last time she had such an exercise was 12 years ago.
Bank-Anthony Okorafor, president, Petroleum Technology Association of Nigeria (PETAN), says the country is not using its resources effectively and oil is diminishing steadily as a major source of economic of strength for countries, as they are turning to gas as alternative to crude oil.
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He says carrying out licensing rounds would enable the country generate employments, create entrepreneurs and increase her reserve; our crude oil is not being used to diversify the economy so that other economic activities can spring up through it. “But unfortunately, we as country are not doing this while other countries are attracting investments to their oil and gas industries while Nigeria is not,” he states.
However, Timipre Sylva, minister of state for petroleum resources, like his predecessor in the last administration that said the licensing rounds would be before the end of 2018, recently said the government would hold an oil licensing round in 2020.
“The oil licensing round is definitely on the table for next year. Part of it is to raise revenue and also to expand the space in Nigeria. There has been no new bid round since 2007, and we think that it is due for us to have a bid round in Nigeria,” he said, adding that the rounds will also be a way to raise revenue.
Experts have said urgent steps should be taken to avoid the country continuous slide in oil production, as this could lead to losing her prime position of being Africa’s top most producer because of declines in crude oil production.
This year annual budget is predicated on 2.2 million barrels per day, but the actual production has hovered around 1.8 million barrels per day in the last few years.
The Federal Government inability to organise licensing rounds has been a source of worry to a lot of stakeholders in oil and gas industry.
They are of the opinion that while the delay in conducting the much-awaited oil licensing rounds reportedly led to significant revenue loss, especially when it is estimated that signature bonuses of N112 billion could be realised from such exercise. About 211 out of 390 oil blocs in the country are currently idle.
Government earlier disclosed on conducting bid round, and promised to offer oil blocs to Niger Delta indigenes as a way of dousing tension in the region, but there are indications that 12 oil blocs in Anambra; 39 in Benin City; 41 in Benue; 17 in Bida; 40 in the Chad Basin and 34 in the Niger Delta, as well as other blocs in different locations are open, even though all may not be viable.
While most stakeholders stress the need for bid round, industry players remain divided on going ahead with it in an uncertain fiscal and regulatory system.
Billions of dollars have been lost due to the government’s inability to conduct bid rounds for major and marginal oil fields, former co-founder and executive director, Pillar Oil Limited, Seye Fadahunsi, has said.
He explained that blocs were a mass of fields. “Imagine what the country could do with that, that’s why companies like Proton, Seplat, and the ND Western now have blocs, producing about 90,000, 70,000, 50,000 barrels per day, respectively. It’s a substantial production and a major addition to the economy,” he said, adding: “They were only able to do that because there were assets available for them to bid and win.”
