OilVoice - Nigeria to Stage Both Onshore and Offshore Licensing Rounds in 2010

Nigeria to Stage Both Onshore and Offshore Licensing Rounds in 2010

Thursday, February 04, 2010

Abuja has announced plans to hold a licensing round for both onshore and offshore fields this year, according to Emmanuel Egbogah, a special energy advisor to the Nigerian president, Umaru Yar'Adua. While details of the number of leases to go on the auction block and the details as to which areas may be included in the tender are yet to be revealed, Egbogah has confirmed that the licensing round would offer blocks collectively containing around 2 billion barrels of reserves. The special energy advisor added that it would include licences that were up for renewal but have been relinquished by their former operators.

The upcoming bidding round is widely expected to play host to the entrance of Chinese investment in the West African nation's oil industry. China has been publicly expressing its interest in gaining access to the country's lucrative oil and gas reserves for some time. Back in September of last year, the China National Offshore Oil Corporation (CNOOC) declared its interested in buying stakes in as many as 23 Nigerian licences. The 23 included 16 currently operated by industry majors such as Royal Dutch Shell, Chevron and ExxonMobil, all of which expired at the end of 2008 (before then being extended an extra twelve months to the end of 2009) and were up for renewal.

CNOOC is thought to be hoping to obtain control of as many as 6 billion barrels of oil in the upcoming auction. This news has of course caused serious concern among a host of international oil firms. They are worried that the Nigerian government will reallocate their shares in joint ventures to CNOOC.

Interestingly, the end of Nigerian militant group the Movement for the Emancipation of the Niger Delta's (MEND) ceasefire, may herald a resumption of violent attacks in the oil-rich Delta region. This will no doubt encourage an existing trend of oil firms reducing their footprint in Nigeria, particularly onshore, and could result in reduced interest in the new licensing round from Western firms.

Shell has been the first to outline its intentions, stating that it is planning to sell $5 billion worth of its onshore assets in the country. So far, the major has sold its 30% interest in licences 4, 38 and 41 to a consortium of Nigerian and foreign companies. Combined, the disposed licences cover a total area of around 2,650 square kilometers in the western Niger Delta.

Review all our latest West Africa news and company profiles