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The Federal Government of Nigeria has announced it will launch a bidding round for seven deep-water blocks this November.
This was disclosed in a statement by Gbenga Komolafe, the chief executive of the Nigerian Upstream Petroleum Regulatory Commission.
This development will be the first time Nigeria will auction new deep offshore oil and gas licenses in 15 years, after the permits between 1993 and 2007.
Mr. Komolafe mentioned that the blocks available are at depths of between about 1,200 meters (3,936 feet) and 3,100 meters. He also noted that, against the norm of locating blocks at the oil base of the country, the Niger Delta, these blocks will be situated at the outskirts of Lagos in southwestern Nigeria.
International companies such as Shell Plc and TotalEnergies SE have accounted for about 35% of oil output. However, with the incessant oil theft and consequential loss in investment, some oil wells have been shut down, leading to the less than 1.2 million barrels a day, as recorded in September.
A market intelligence agency, S&P Global Commodity Insights have projected that between 2025 and 2030, Nigeria’s deepwater projects will have the capacity to add at least 2.3 billion barrels of crude oil to Nigeria’s existing reserves.
“The deepwater projects that are due to start up between 2025 and 2030 are estimated to hold recoverable resources, of 2.3 Barrels. Without the sanctioning and commissioning of currently unsanctioned projects, Nigeria’s overall production will likely decrease from the end of the decade.
“It’s the deepwater projects that can provide this extra production required to offset the expected production decrease. Therefore, unsanctioned deepwater projects are seen as the prime target area for fiscal and regulatory improvement which is thought to have occurred if the assets convert to the new PIA fiscal terms,” it stated.
Following the prospects of the deepwater projects and recent attacks on oil wells, a number of oil companies have recently begun to exit Nigeria’s shallow waters.
“An example is Preowei, where operator TotalEnergies announced that it is to accelerate the development with a possible early conversion to the PIA terms due to the new fiscal structure which contains tax advantages.
“These projects should remain an area of particular focus for the government. Indeed, they could become stranded if the terms available are not acceptable to license holders.
“However, as the May 2021 renegotiation of the Bonga Southwest PSC terms demonstrated and the subsequent August 2022 renegotiation of a further six blocks including OML 125 & 130, if the government and international oil companies (IOCs) are able to find common ground on such projects, this could raise Nigeria’s production outlook towards the end of the decade, which would also likely help to secure the country’s output over the longer term,” the report said.
Source: Oriental News Nigeria
