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Oil Licensing: Nigeria Lags as Angola, Others Move Ahead

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  • Oil Licensing: Nigeria Lags as Angola, Others Move Ahead

Stakeholders in the nation’s oil and gas industry are still left guessing about when a major licensing round or at least a marginal fields bid round will be held amid a lull in exploration activities.

Nigeria has the second largest proven reserves in Africa, with an estimated 37.5 billion barrels of crude oil deposits at the end of 2017, representing 2.2 per cent of the global total, according to the BP Statistical Review of World Energy 2018.

The country has the largest proven gas reserves on the continent at 5.2 trillion cubic metres.

If current levels of production and reserves remain constant, the country is forecast to run out of oil in 51.6 years and natural gas in 110.2 years, according to BP data.

Over the past few years, industry stakeholders have stressed the need for the country to increase its oil and gas reserves.

The last major licensing round was held in 2007, while the most recent bidding round for marginal fields was in 2003.

The number of active oil rigs in Nigeria fell by 17.6 per cent to 28 in November from 34 in October, data obtained from Baker Hughes Incorporated and the Organisation of Petroleum Exporting Countries showed.

Rig count is largely a reflection of the level of exploration, development and production activities occurring in the oil and gas sector.

Angola, Africa’s second-biggest producer after Nigeria, is putting the finishing touches on its first oil licensing round in eight years, hoping to replace dwindling production at some maturing fields and seeing renewed investor appetite in its oil industry.

Its Minister of Mineral Resources and Petroleum, Diamantino Azevedo, was quoted by S&P Global Platts in an interview this month that the country was preparing a strategy for onshore and offshore oil and gas blocks licensing for the period 2019 through 2025.

Last week, Norway’s Ministry of Petroleum and Energy said it had awarded a record number of production licences (83) in the North Sea, the Norwegian Sea and the Barents Sea under the country’s latest Awards in Pre-defined Areas exploration round.

The APA 2018 licensing round comprises blocks in predefined areas and a total of 83 licenses were distributed over the North Sea (37), the Norwegian Sea (32) and the Barents Sea (14).

A total of 33 different oil companies, ranging from the large international majors to smaller domestic exploration companies, were awarded ownership interests in one or more production licences.

“This is the largest licensing award on the Norwegian continental shelf. 53 years after the first licensing round, this new record confirms the industry’s belief in continued value creation and activity in Norway,” the Minister of Petroleum and Energy, Mr Kjell-Børge Freiberg, said.

As part of efforts to reduce its reliance on oil imports, one of Nigeria’s biggest customers, India, has offered 14 blocks for oil and gas exploration in the latest auction round under which winning bidders can carve out areas for drilling.

The second round of the country’s Open Acreage Licensing Policy opened for bids on January 8 and will close on March 12. These blocks are expected to be awarded in May, according to S&P Global Platts.

It will be the second auction under the new Hydrocarbon Exploration and Licensing Policy approved by Prime Minister Narendra Modi’s government in March 2016. The first round was launched in January last year.

HELP forms part of a government strategy to double India’s oil and gas output by 2022-2023.

Reuters reported last month that 16 oil and gas firms had submitted applications for one or more of five Ghanaian offshore blocks in the West African country’s first exploration licensing round.

Ghana, which currently produces 200,000 barrels of oil per day, is keen to unlock more resources after it began pumping from its flagship offshore Jubilee field in 2010.

“Τhe high level of interest shown by major International Oil Companies in our first licensing round is a vote of confidence in the Ghanaian economy,” Deputy Minister for energy in charge of petroleum, Mohammed Amin Adam, was quoted as saying.

The Managing Director, Neconde Energy Limited, Mr Frank Edozie, told our correspondent that most operators in the Nigerian oil industry had slashed spending on exploration activities.

The delay in passing the Petroleum Industry Bill had brought about “significant amount of uncertainty” about the future of the industry.

He said, “What that has done is that people are hedging their bets; nobody is exposing themselves in terms of significant expenditure on exploration. Exploration is looking for production of the future. Because the future of the industry is not clear due to uncertainty around the bill that will become law to govern the industry, people are shying away from investing in exploration.

“That is one of the reasons it is critical for the industry that there is a bill that is passed into law. Clearly, our reserves are declining. We are eating the accumulated food from yesterday, so to say. In another two to three years, if things don’t change, we will begin to see the results of this in our ability to meet our production quota.”

The Chairman and Chief Executive Officer, Waltersmith Petroman Oil Limited, Mr Abdulrazaq Isa, told our correspondent that some indigenous operators had been waiting for licensing rounds in recent years.

He said, “Our game is all about reserve replacement. The longevity of your business is driven by the size of your reserves and the moment you begin to produce an asset, you are already draining it. So, you need to replace those you have produced.

“Some assets need to come into the market so we can bid for them and in order to extend the longevity of the nation’s reserves. Our members are waiting anxiously. So, I can tell you that there will be a lot of activity in that space once that (marginal bid round) happens.”

According to Isa, Waltersmith needs additional feedstock for the 5,000bpd modular refinery it is currently building.

“We are looking to expand it (the refinery) to about 30,000 bpd. So we are going to need additional oil feedstock for our expansion programme. We need access to these resources; so we are very keen to participate in any new licensing rounds.”

The Chairman/Chief Executive Officer, International Energy Services Limited, Dr Diran Fawibe, noted that the appetite for exploration had been very low in Nigeria since 2014 when the crisis in the global oil and gas industry started.

Lamenting the delay in the passage of PIB, Fawibe said “the unpredictability of the direction the government is going regarding the oil and gas industry” had affected investments.

“There is a need to finalise the PIB, remove the uncertainty and let foreign direct investment come into the country. But unfortunately, this has not caught the interest of our lawmakers to do justice to this,” he added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

Nigeria-South Africa Trade Hits $2.9bn

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Shipowners

The volume of trade between Nigeria and South Africa hit $2.9 billion last year with expectation of it rising further with the African Continental Free Trade Area (AfCFTA) agreement.

Nigeria’s Consul General, Malik Abdul, in a statement noted that Nigeria accounts for 64 per cent of South Africa’s trade in West Africa and is one of his country’s top three sources of crude oil.

He further added that in 2020, South Africa imported R35 billion ($2.48 billion) worth of goods, predominantly crude oil from Nigeria and exported R6 billion ($425milion) to Nigeria.

He stated: “South Africa is currently among the top 10 per cent of investors in Nigeria, globally and Nigeria is South Africa’s 10th biggest export market in Africa and thirty-second globally. Nigeria accounts for 64 per cent of South Africa’s trade with West Africa and is one of South Africa’s top three sources of crude oil.

“Also, Nigeria in 2020 was South Africa’s top import market in Africa and sixth globally, after China, Germany, USA, India and Saudi Arabia. Over the past year, South Africa imported $2.48 billion worth of goods predominantly crude oil from Nigeria and exported $425 million worth to Nigeria.”

Also, the consulate said his embassy issued a total of 10,341 passports to Nigerian citizens in South Africa between March 2020 and May 2021.

The consul general further said the Mission had 404 unclaimed passports, and advised all those whose passports were processed and pending from August 2020 to come for collection.

Abdul added that the consulate was working to clear all COVID-19 lockdown backlog of applications, urging members of the public to exercise patience while the mission was resolving the backlogs.

On the re-introduction of administrative fees and charges for lost passports, Abdul said that the step was taken to harmonise and standardise consular services following approval from the Ministry of Foreign Affairs, Abuja.

The Mission had increased the fees for lost passports from R1,500 to R2,000, and admin charges of R120 for data capturing.

“On this issue, the Mission could not unilaterally impose any charges without headquarters’ approval or consent.

“The admin fees of R120 pertains to all services rendered by the two Missions,” he said.
According to the Nigerian envoy, the decision was taken to remove disparities in all consular services, noting that visa fees have also been harmonised.

On penalty for lost passports, Abdul disclosed that 484 Nigerian passports were reported missing at the mission between August 2020 and May 2021 with request for re-issue.

Abdul said it was discovered that there were criminal undertones and immigration rules infractions associated with the ‘so-called’ lost passport declarations.

“In line with practice in other Missions, there was a need to impose fines to deter people from engaging in such infractions.

“At such an astronomical rate of loss declarations, the option will be to refer such losses to Nigeria for processing.

“This will save the booklet for genuine requests of re-issue and thereby reducing the backlog and pressure on the Mission,” the envoy said.

Abdul disclosed that the consulate had received a directive to embargo processing of lost passports pending further instructions from the headquarters.

The consul general then accused some Nigerian groups in South Africa of, “peddling lies and outright falsehoods” against the Mission and his person.

“These disgruntled elements have gone ahead to incite fellow Nigerians with intent to sabotage the Mission.

“Moreover, a lie and falsehoods often repeated amounts to a propaganda which can be misinterpreted by the gullible and undiscerning as truth,” he said.

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Economy

NNPC Engages Gas Producers to Improve Power Supply

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Electricity - Investors King

The Nigerian National Petroleum Corporation (NNPC) has started engaging gas producers across the country in an effort to boost gas supply to power generation companies (Gencos) and subsequently improve electricity supply.

Mr. Yusuf Usman, the Chief Operating Officer, Gas and Power, NNPC, disclosed this in Lagos during his tour of Egbin Power Plc facility on Monday.

Usman, who responded to concerns raised by the Chairman of Egbin Power Plc, Mr. Temitope Shonubi, said the company’s concern on gas supply and transmission restrictions had been noted, adding that the corporation would support it to ensure constant power supply.

I have listened to all the concerns you raised. An area of concern to me is when you talked about the gas constraints. We are going to support you to make sure that the power supply is steady. We are having a session with gas suppliers in this regard.

“I am aware that works are ongoing in this regard to ensure that all the power we generate is safely evacuated,” Usman said.

Usman, however, said he was impressed by the level of progress being recorded by Egbin, noting that the effort of the company’s management to effect turnaround maintenance at the company through overhaul of the entire system, was commendable.

Usman added: “The visit has been an eye opener for me. We have seen turbines that have been running for over 40 years. We have seen efforts being made by Egbin management to effect a turnaround at the plant through overhaul of the entire system.

“We have also seen the support you have been given to the youths through employment and capacity development opportunities.”

Shonubi, in his remarks, said Egbin Power was planning to increase power generation by 1,900 megawatt.

Shonubi said: “Egbin has 1,320MW capacity. As at the time we took over, the plant was generating 300MW which is abysmal 22 per cent. As at today, our generation capacity has surged and we do 89 per cent.

“We have reached the highest peak of 970MW and we are working hard to ensure sustainability of this feat.

“The 970MW we hit is the highest recorded this year and based on our core value of sustainability, we are working round the clock to make sure that we sustain the gains, which we have made.”

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Economy

Nigeria’s Inflation Rate Moderates to 17.93 Percent in May

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consumer price index - Investors King

Inflation in Africa’s largest economy, Nigeria, moderated from 18.12 percent year-on-year in April to 17.93 percent year-on-year in May, according to the latest report from the National Bureau of Statistics (NBS).

On a monthly basis, headline inflation grew by 1.01 percent in May. Representing an increase of 0.04 percent when compared to 0.97 percent filed in April.

Core inflation, which excludes the prices of volatile agricultural
produce stood at 13.15 percent in May 2021, up by 0.41 percent when compared with 12.74 percent recorded in April 2021.

On month-on-month basis, the core sub-index increased by 1.24 percent in May 2021. This was up by 0.25 percent when compared with 0.99 percent recorded in April 2021.

The highest increases were recorded in prices of Pharmaceutical products, Garments, Shoes and other footwear, Hairdressing salons and personal grooming establishments, Furniture and furnishing, Carpet and other floor covering, Motor cars, Hospital services, Fuels and lubricants for personal transport equipments, Cleaning, repair and hire of clothing, Other services in respect of personal transport equipments, Gas, Household textile and Non durable household goods.

The average 12-month annual rate of change of the index was 11.50 percent for the twelve-month period ending May 2021; this is 0.25 percent points higher than 11.25 percent recorded in April 2021.

Food index rose by 22.28 percent in the month of May 2021, up by 0.06 percent points from 0.99 percent recorded in April 2021.

The average annual rate of change of the Food sub-index for the twelve-month period ending May 2021 over the previous twelve-month average was 19.18 percent, 0.60 percent points from the average annual rate of change recorded in April 2021 (18.58) percent.

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