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Oil Licensing: Nigeria Lags as Angola, Others Move Ahead

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Oil
  • 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.

Economy

NNPC to Focus on Domestic Gas Growth, Says Kyari

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Gas Exports Drop as Shell Declares Force Majeure

FG, NNPC to Focus on Growing Domestic Gas Utilisation

Mr. Mele Kyari, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), has said the corporation is presenting focusing on growing domestic gas utilisation.

The Managing Director disclosed this on Tuesday during a virtual BusinessDay Energy Series Summit with the theme, “Nigeria at 60: Harnessing Nigeria’s Energy for the Future.”

The NNPC boss also said the corporation is committed to delivering key gas infrastructures such as Escravos-Lagos Pipeline System II, Obiafu-Obrikom-Oben Gas Pipeline, Ajaokuta-Kaduna-Kano Gas Pipeline, and Central Gas Processing Facilities.

He stated that NNPC was working on developing five gigawatts of power generation by 2022.

He said, “At the NNPC we are aggressively pursuing other gas development initiatives with the aim of improving Nigeria’s economy using the appropriate fuels.

“In terms of gas and power, we are developing and integrating gas and power infrastructure networks (increase interconnectivity) as well as stimulating gas demand (power generation, feedstock and transport, etc).”

Kennie Obateru, the NNPC spokesperson, quoted the NNPC boss in a statement issued in Abuja. He said the corporation was working on domestic gas utilisation to five billion standard cubic feet of gas per day.

He added that the Nigerian Liquefied Natural Gas Train 7 would be completed and delivered by 2024.

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Economy

Senator Rejects Aisha Umar From North-East as PenCom DG Replacement for South-East

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pension funds

Law Markers Rejects President Buhari’s PenCOM Director-General Nominee

The Senate has rejected President Buhari nominated Director-General of the National Pension Commission, Aisha Umar.

Some of the Senators, who vehemently protested the nomination immediately the Senate President, Ahmad Lawan, read Buhari’s letter said Aisha Umar from the North-East should not be replacing the former DG, Mrs Chinelo Anohu-Amazu, who is from the South-East.

The aggrieved senators said the action of the president is flagrant breach of the Act that established the PenCom.

According to Section 20(1) and section 21(1) and (2) of the National Pension Commission Act 2014, states, “In the event of a vacancy, the President shall appoint replacement from the geopolitical zone of the immediate past member that vacated office to complete the remaining tenure.”

Meaning President Buhari had acted against the Act establishing the PenCom.

Speaking on behalf of the aggrieved Senators, Enyinnaya Abaribe, the Senate Minority Leader, said “I recall that the tenure of the incumbent was truncated. Therefore, the new letter from the president that has now moved the chairman of the commission to another zone may not be correct.

“It is against the law setting up the National Pension Commission and the Federal Character Commission.

“Before you (Lawan) send it to the appropriate committee tomorrow, (Wednesday), I wish to draw the attention of the committee to it.”

The Senate President, however, rejected the minority leader’s point of order and observation, saying “That is for me to interpret because I interpret the laws here. If there is any petition to that effect it should be sent to the committee.”

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Economy

Electricity Regulatory Commission Suspends Tariff Increase for 14 Days

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ossiomo

Nigerian Electricity Regulatory Commission Suspends Tariff Increase for 14 Days

The Nigerian Electricity Regulatory Commission (NERC) has suspended the increase in electricity tariff in accordance with the resolution reached between the Federal Government and the Nigerian Labour Congress and Civil Rights groups.

The commission suspended the new tariff implemented on September 1, 2020 for 14 days.

The NERC, in its Order No. NERC/209/2020 issued around 10.30 pm on Tuesday, describing the regulatory instrument as “NERC Order on suspension of the Multi Year Tariff Order 2020 for the electricity distribution licensees.”

The commission said, “This order shall take effect from 28th September 2020 and shall cease to have effect on the 11th October 2020.”

This is coming a day after the labour union agreed to halt a nationwide industrial action to allow the government fashioned out a way to address the recent increase in prices from pump price to electricity bill.

Labour had described Federal Government action as anti-people policy, especially given current economic realities.

The government on the other hand had said the hikes were touch necessary decision to advance the nation’s economy and further improve power supply and revenue generation necessary to deepen economic growth.

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