Nigeria's Most Transparent Licensing Round: Nigeria's Latest Exploration Licensing Round Is Perhaps the Most Transparent of Its Recent History. Bidding Has Been Competitive and Intense despite Provisions Tying Downstream Activities to Contracts

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The Nigerian government has in its latest licensing round attempted to move away from its reliance on traditional high profile upstream deals with the majors.



A greater range of companies are expected to secure acreage, while the blocks on offer cover a wider spread of the country than in previous years. At the same time, the federal government has sought to kick start progress in the refining and power sectors by tying up-stream contracts to the less attractive prospect of developing refineries and power plants.

A total of 78 blocks were offered in the Anambra Basin, Benue Trough and Chad Basin, plus the more established zones in the Niger Delta and deepwater areas. A total of 379 bids were received that will result in the award of 27 blocks. The president's advisor on petroleum resources, Edmund Daukoru, indicated that all of the unallocated blocks would be included in another licensing round, probably next year.

All of the awards must receive a presidential decree before they are confirmed and full details of the successful bids will be published following confirmation.

The director of Nigeria's Department of Petroleum Resources (DPR), Tony Chukwueke, commented that the number of bids "exceeded the estimate of our target of 200. It is an enormous amount of work for our team; the DPR is kind of closing one whole section down to get all of these evaluated."

The government and the DPR have put a great deal of effort into ensuring that the round is as transparent as possible and clear bidding guidelines have been supplied to all interested parties.

Until recently, the process of awarding many oil and gas exploration blocks was relatively secret and it was difficult to discern any clear pattern in the procedure. In the latest round, however, all bidding took place electronically in order to minimise the opportunities for any irregularities. Chukwueke refuted allegations that any blocks had been reserved for particular companies.

Daukoru said: "We are by this event attempting to send a clear message to the oil industry and the world that Nigeria has turned the corner and the management of the oil and gas sector can indeed be transparent."

Observers from the energy ministries of the UK, Brazil and Norway were invited to come to Nigeria to oversee the process and the licensing round was publicised at a series of road shows in London, Houston, Beijing and Singapore.

Bids were assessed on the amount of local content in their ancillary contracts and the number of Nigerians to be employed, as well as on their technical expertise and the size of the signature bonuses on offer.

Nigeria's first deepwater field to come on stream

Some of the most attractive acreage in the round lay in the deepwater arena where over 3bn barrels of oil and 16 trillion cubic feet of natural gas have already been discovered on the Agbami, Akpo, Bonga, Bonga SW, Chorta, Eha and Nwa/Doro fields.

Daukoru commented that production was expected to begin on Bonga before the end of September. The field is being developed by Shell and is the first Nigerian deepwater field to come on stream.

Daukoru said: "Bonga will come on stream with 50,000 barrels a day (b/d) and will ramp up very quickly to between 200,000 and 250,000 b/d in six months' time." The succession of deepwater projects in Nigeria that are expected to come to fruition over the next few years should make a sizeable contribution to boosting global output.

While the lack of refining capacity around the world is the biggest cause of the current high level of oil prices, there is no doubt that increased production from Nigeria's deep-water fields will also be popular among net importing states.

"Together with the efforts the Saudis are making and with our 250,000 barrels from Nigeria--and Angola too is making efforts--we will have to wait six months before we see any impact. …