People & Money

FG Starts 2022 Mini Bid-Round – NUPRC

Nigeria through the National Upstream Petroleum Regulatory Commission (NUPRC) has started the 2022 mini bid-round process in line with the Petroleum Industry Act 2021 (PIA). The announcement was made by the Chief Executive of the NUPRC, Mr. Gbenga Komolafe in a statement released to the News Agency of Nigeria. 

The mini-bid round is an opportunity to stimulate oil exploration and drilling in Nigeria’s deep waters. According to Mr. Komolafe, the process was aimed at furthering the development of Nigeria’s offshore assets

He also stated, “The National Data Repository of NUPRC and our multi-client partners are delighted and ready to support the Mini Bid Round underpinned by high-quality datasets. The blocks have extensive 2D and 3D seismic data coverage, including multi-beam and analog data.

“Additionally, a remarkable quality, 3D MegaSurveyPlus reprocessed Pre-stack Time Migration (completed October 2022), with angle stacks and gathers is also available to prospective bidders.

“Links to all data can be accessed via the dedicated NUPRC portal.

Also Read: Nigeria’s petroleum industry to attract investors

“The mini-bid round is a market-driven programme and will follow a transparent and competitive procurement process designed to attract competent third-party investors globally that have the capability and proficiency in operating in the deepwater environment,” 

The last bid round was held in 2007 when 45 blocks from the Anambra Basin, Lake Chad Basin, Benue Trough, the Niger Delta Continental Shelf; Onshore Niger Delta and Deep Offshore were put on offer. And the NUPRC boss noted that this present bid round was offering 7 blocks that covered approximately 6,700 sq. km with water depths between 1,150 to 3,100m.

According to the report available on NUPRC’s website, an online portal dedicated to the mini bid-round has been opened on the NUPRC website, and a pre-bid conference was scheduled for January 16, 2023, at the Eko Hotel and Suites. The statement also mentions that submission of pre-qualification applications by interested companies would start on the 31st of January. 

In his report, Mr. Komolafe noted that the success of the mini bid-round would ensure that all stakeholders gain value from the country’s resources while paying close attention to the reduction in carbon emissions and overall ESG considerations. 

Nigeria’s Offshore Deepwater History

The history of the deep offshore blocks is traceable to 1993 when Nigeria’s Deep Offshore and Inland Basin Sharing Contract Act was enacted. Bonga oilfield was the first commercial deepwater oilfield discovered in 1993 by Shell Nigeria Exploration and Production Company (SNEPCO), however, production didn’t until 2005. As of 2018, the Bonga oil field was reported to have produced 600 million barrels of oil between 2005 till 2018. 

After Bonga, Chevron discovered oil in the Agbami oilfield which is offshore the Niger Delta in 1999. To date, Agbami remains Nigeria’s largest deepwater discovery with estimated reserves of about 900 million barrels of oil. After Agbami, ExxonMobil discovered oil in the Erha oilfield which began production in 2006 with a daily production of 190,000 barrels per day. 

Also Read: 2023 Budget to Take Nigeria’s Debt to N77 Trillion 

Essentially, after the passing of the sharing contract act in 1993, oil companies made vast discoveries in Nigeria’s deep waters located around the Niger Delta Basin. And in 2007, under the regulatory framework of the Petroleum Act of 1969, 45 deepwater offshore blocks were offered in Nigeria’s first mini bid-round. After the bidding round in 2007, some of these oilfields have yet to become functional. 

Experts have complained about the zero per cent royalties policy that was put in place for the first set of deepwater oilfields. According to a report by Premium Times in 2018, if Nigeria had fixed a 3% royalty on oil production in its deep waters, the country would have made about N1 trillion between 2010 to 2017. 

It is hopeful that under the PIA 2021, the country would stem revenue losses from deepwater assets. The royalties for new deepwater petroleum prospecting licenses (PPL) are $8 per barrel or 20% of oil price up to a cumulative production of 500m barrels or $4 per barrel or 20% of oil price above 500m barrel, and for the old and existing OMLs, it is the lower of $2.50 per barrel or 20% of the oil price. 

David Olujinmi

David Olujinmi studies Engineering but his true passion is research and analysis. He writes about finance, particularly the capital market, investment banking, and asset management. More »

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