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Oilfield Bid Round: FG May Generate N3.17 Billion From Fees

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  • Oilfield Bid Round: FG May Generate N3.17bn From Fees

The Federal Government may generate at least N3.17bn from the payment of fees for the marginal fields put on offer for bidding, data obtained from the Department of Petroleum Resources have shown.

Indigenous oil firms and other investors willing to bid for any of the 57 marginal fields are expected to pay fees amounting to N55.6m per field.

The Director-General, Budget Office of the Federation, Ben Akabueze, had said last month that the government would accelerate marginal fields licensing and renewal of expiring oil mining licences as part of measures to augment revenues.

The DPR announced on Monday the start of the 2020 Marginal Field Bid Round, which “is open to indigenous companies and investors interested in participating in the exploration and production business in Nigeria”.

According to the agency’s guidelines, applicable fees are N500,000 for registration; N2m for application; N3m for bid processing; $15,000 for data prying; $25,000 for data leasing; $50,000 for competent persons’ report, and $25,000 for field-specific report.

Using an average exchange rate of N440/$ in the parallel foreign exchange market, the fees amount to N55.6m per field.

“In addition to the above-listed fees, the signature bonus shall be paid by successful bidders prior to award,” the DPR said.

According to the guidelines, registration, application and processing fees are to be paid into the Treasury Single Account; the fees for data leasing, data prying, CPR and field-specific report are to be paid into the National Data Repository account, and signature bonuses to be paid into the Federation Account.

Several industry stakeholders have described the fees as too high, given the current realities in the oil and gas industry, saying this could discourage many firms from participating in the exercise.

“I fully support the bid round but I think the fees are too exorbitant,” a former board member of the Nigerian National Petroleum Corporation, Alhaji Abdullahi Bukar, told our correspondent on Wednesday.

Stressing the need for the government to support industry players, Bukar said, “If they lower the fees, people who have the capacity to make investments will latch onto the opportunity.

“I don’t think it will be an all-comers’ affairs because everybody knows that the price of oil has crashed. What you will get are people who are serious.”

According to the DPR, the bid round is aimed at growing production capacity by expanding the scope of participation in Nigeria’s petroleum sector, and increasing oil and gas reserves base through aggressive exploration and development effort.

Other objectives include to promote indigenous participation in the sector, thereby fostering technological transfer, and to provide opportunity to gainfully engage the pool of high level technically competent Nigerians in the sector.

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

FG Spends N10 Trillion on Petrol Subsidy in 14 Years – NNPC

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NNPC Says FG Has Spent N10 Trillion on Petrol Subsidy in the Last 14 years

The Nigerian National Petroleum Corporation said the Federal Government spent a total sum of N10 trillion on petrol subsidy between 2006 and 2020.

This was disclosed on Saturday by Mele Kyari, the Group Managing Director, NNPC, during an interview on Liberty FM, Kaduna.

According to the NNPC boss, the federal government removed petrol subsidy because of the fraud perpetrated by some cabals in the oil industry.

He said the beneficiaries of petrol subsidies were marketers who smuggled federal government subsidised product into neighbouring countries for bigger gains.

The NNPC boss said these marketers made more profits by producing fake documents to collect subsidy for fuel they never imported or sold.

He said, “The crude oil is a global commodity and its price is not hidden. Everyone can calculate and know how much the cost of every final product from the crude at international market is.

“Since the inception of the country, the government has been paying subsidy on petrol to make it cheaper for Nigerians to buy below the cost price.

“This subsidy is designed to assist the masses of Nigeria; that is the intention, but in reality, the masses are not the beneficiaries. First, the masses are not the owners of the exotic cars buying fuel, owning the filling stations and doing the oil business.

“This subsidy that the government has been paying over the years is the root of all the atrocities and fraud committed in this country.

“If you look at it from 2006 till 2020, we have spent over N10tn on fuel subsidy. Apart from that, there is also subsidy on foreign currencies. Everybody knows how much is dollar in the market, but government is also subsidising it. So, this and the fuel subsidy within this period is around N14tn to N15tn.

“What was happening with the subsidy is that, some marketers were smuggling fuel to other neighbouring countries because it was cheaper in Nigeria due to the subsidy.

“Another one is those who use fake documents and bring to government to collect subsidy for fuel they never imported and the previous government was paying them.

“So, it was not the masses of Nigeria that were enjoying this subsidy except some cabals, who are rich and powerful.”

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Economy

Nigeria’s Oil Sales Revenue Plunges by 75 Percent

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Oil Sales Revenue Declined by 75 Percent to $55.29 Million

Nigeria’s oil revenue plunged by 74.89 percent in July, according to the latest report from the Nigerian National Petroleum Corporation (NNPC).

Oil sales revenue declined to $55.29 million in the month under review, down from $219.58 million recorded in June and $120.50 million in May.

The record fall in global oil prices and demand due to COVID-19 plunged Nigeria’s crude oil sales from $336.65 million posted in January to $281.14 million in February, $184.59 million in March and $148.86 million in April.

This was after Brent Crude oil, against which Nigerian crude oil is priced, plunged to as low as $15.98 per barrel in April, down from $70 per barrel it was sold in January.

Oil and gas constitute 50 percent of the Nigerian government revenues and over 90 percent of export earnings despite accounting for just about 10 percent of the nation’s GDP.

A total export sale of $84.63m was recorded in July 2020, decreasing by 66.95 per cent compared to last month. Crude oil export sales contributed $55.29m (65.34 per cent) of the dollar transactions compared with $219.58m contribution in the previous month,” the NNPC said in its latest monthly report.

NNPC said gas exported in the month stood at $29.33 million.

July 2019 to July 2020 crude oil and gas transactions indicated that crude oil and gas worth $3.91bn was exported,” it added.

According to the report, the federation crude oil and gas lifting are broadly classified into equity export and domestic, and are lifted and marketed by the NNPC while the proceeds remitted into the Federation Account.

It said, “Equity export receipts, after adjusting for joint venture cash calls, are paid directly into Federation Account domiciled in the Central Bank of Nigeria.”

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Economy

Rivers State Partners Shell Nigeria on Assa North Gas Project

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Rivers State, Shell Nigeria Partner on Assa North Gas Project

Rivers State and the Shell Petroleum Development Company of Nigeria Limited (SPDC) have partnered to build SPDC’s Assa North Gas project, with a capacity of 300 million standard cubic feet of gas per day.

According to the people familiar with the project, it has the potential to be one of the largest domestic gas projects in Nigeria when completed.

Mr. Eloka Tasie-Amadi, the State Commissioner for Chieftaincy and Community Affairs, who spoke at the inauguration event, urged the comrade Orikoha Ekwueme-led newly elected officials of the Cluster Development Board to use the opportunity of leadership to make positive impacts that will improve living standards in their communities.

The state government is always available to support you. Always speak with your people, including the Community Trust Committees (which were also newly inaugurated). Adequate communication will ensure the buy-in of all your stakeholders.

“Leadership is more of sacrifice; not an opportunity for personal benefit”, he said.

Also, speaking was Mr Igo Weli, the General Manager External Relations, SPDC, said, “The Global Memorandum of Understanding (GMoU), that you signed today, sets the framework for a long-term partnership between SPDC JV and the Egi/Igburu Cluster. The GMoU runs on the principle of community-led development. Today, SPDC JV commits to providing funding to help you realise your community development aspirations.

Represented at the ceremony by SPDC External Relations Manager for Projects and Opportunities, Dr Banji Adekoya, he asked the CDB to “be prudent and implement projects and programmes that will deliver maximum benefits to the Egi/Igburu communities. Note that government, SPDC JV, and the communities that you represent will hold you accountable for the judicious utilisation of the development funds.”

“With the inauguration, SPDC reiterates the company’s commitment to the Assa North Gas Project and to making it an exemplary one, particularly in Nigeria’s quest for energy sufficiency, for power generation and industrialisation,” he said.

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