While many oil-producing
countries, including Angola and Norway, are extending efforts to ramp up
their production and reserves, Nigeria has failed to hold any oil
licensing rounds since 2007, ’FEMI ASU writes
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.
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