“The marginal bids would be competitive.”
Many of the industry players who spoke with The Guardian feared that the country’s obsolete regulations, especially the non-passage of the Petroleum Industry Bill , were worsening transparency and fostering uncertainties. They noted that a harsh operating environment coupled with prevailing realities in the international oil market would create an elusive outlook for licensing rounds.
While the Department of Petroleum Resources said concerns being raised by stakeholders could be addressed and that the non-passage of the PIB would not affect the outcome of the bid rounds, some stakeholders expected the Federal Government to have waited for the passage of the PIB by the middle of this year as earlier promised.
Though the government claims that the marginal oilfields, which are expected to be taken up by indigenous producers are less impacted by the low crude oil prices as they might not need to do so much on the fields before commencing production, it is not clear whether the government will be able to command significant value for the fields, as investors may struggle to raise adequate financing to support participation in the bid round amid the global economic crisis and looming local economic...
DPR Director Auwalu Sarki, in his response to some of the concerns raised by stakeholders, said fields that were under litigation were not included among the 57 currently being offered to investors. “The marginal bids would be competitive. There are no price tags for the oil fields. The offer and bid price will determine the competitiveness. The investors will price the fields themselves. Selling them will help both investors and government,” he said.
The President of Oil and Gas Trainers Association of Nigeria and a former president of the Nigerian Association of Petroleum Explorationists , Dr. Mayowa Afe, said there was no right or wrong time for the bid round, as the oil and gas industry has not seen major activities in recent times. He said: “Why the rush in taking the bid round when the PIB is being considered? Operators do not need to be begged. They will align with the process. How can someone bid for something for which he does not have sufficient information? They should allow civil societies to monitor the process for transparency. Let’s get the framework for the PIB before going for the bids. Most of the fields have been lying fallow.
“The quality of assets on offer, supported by sound data, is often the lead factor determining what prices governments will fetch for their acreage. Bidders in future rounds must have full access to a repository that acts as the single source of authenticated and certified data. DPR should press operators withholding data on marginal fields for full turnover.”
“Before the commencement of bidding activities, Nigerians should insist on evidence of the following four key deliverables. One, a comprehensive national economic development plan and how the expected signature bonuses would be used to implement the plan. Adeoye Adefulu, an energy expert and Partner at Odujinrin and Adefulu, called for transparency in the selection of bidders, noting that the country must apply local content rule and prioritise Nigerian indigenous operators in the award of oil fields. He said: “The work obligations that would be imposed on the successful bidders must be clear and published, and must be monitored and enforced rigorously by the regulator.
“We have continuously said that we are very committed to price sensitive acquisitions. That means we do not overpay. So, as the industry changes, it means that the prices that buyers are willing to pay will continue to change and we would adapt and continue to do our acquisitions.”
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