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Peter Uzoho

As the federal government awaits interest from local and foreign companies to bid for the new seven Deep Offshore oil blocks recently put on offer, oil and gas experts have tipped French oil major, TotalEnergies, Asian and Nigerian independent oil firms as likely bidders and possible buyers of the assets.

The experts, who spoke to THISDAY in separate phone chats, ruled out the possibility of Shell, ExxonMobil, Chevron and Eni (Agip) from indicating interests in the new Deep Offshore oil blocks, citing the unfavourable business environment in Nigeria, which they said makes new foreign investment inflows in the country difficult.

They also advised the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to put priority on the development of the oil assets by making sure that the conditions and criteria for the bid round enable competent and experienced investors to emerge as winners of the blocks, rather than focusing on raising immediate revenue for goverment through the exercise.
NUPRC had a fortnight ago announced the commencement of the process to invite Nigerian and foreign oil industry companies to apply for seven new Deep Offshore oil blocks, about 15 years after the last bid round for such assets took place in 2007 when 45 blocks

drawn from the inland Basins of Anambra, Benue and Chad; the Niger Delta Continental Shelf; Onshore Niger Delta and Deep Offshore were auctioned.

The Chief Executive Officer of NUPRC, Mr. Gbenga Komolafe, who announced the commencement of the exercise in Abuja, had stated that the offshore blocks cover an area of approximately 6,700 km2 in water depths of 1,150m to 3,100m.

The offshore assets are located off the city of Lagos rather than off the coast of the Niger Delta further to the east where most of the country’s oil industry is concentrated.

Komolafe had equally disclosed that a pre-bid conference was scheduled for January 26,  2023, to provide potential applicants with an opportunity to ask questions they may have concerning the mini bid round process and requirements, after which interested companies would be invited to submit their pre-qualification applications by  January, 31, 2023.

But speaking to THISDAY, the Publisher of Oil+Gas Report, a specialised magazine covering developments in the local and international petroleum sector, Mr. Toyin Akinosho, said TotalEnergies, Eni and some independent oil firms in Nigeria and abroad were likely to indicate interest to bid for the new oil blocks.

Akinosho also ruled out the possibility of oil majors like Shell, ExxonMobil and Chevron to bid for the assets, citing the unfavourable business environment in Nigeria, which according to him, were unbearable for these three IOCs that are more averse to unnecessary risks.

He said the IOCs were tied of Nigeria and the way it manages the oil sector,  maintaining that the oil majors were tired of the country’s regulatory issues, corruption and strange court injunctions where billions of naira were awarded against them among other concerns.

Citing the recent Seplat’s experience when it tried to acquire ExxonMobil’s assets and the treatment meted out to it by the agents of the Nigerian state, leading to the disapproval of the already done deal, he said such incident would make it difficult for most of the IOCs to bid for the blocks.

Akinosho said, “The point is that these guys (IOCs) are tied about us, they are tired of our regulatory issues,  courts giving billions of naira or some unexpected cases. They are tired of our corruption, they are tired of NNPC’s thing.

“So this particular group -IOCs, Shell, Chevron, ExxonMobil, they won’t be interested. But there are some very hard guys who don’t have problem with our risks. Total may take. Eni is turning around. But Shell is out of here; Chevron is out of here; ExxonMobil is out of here. They just basically find Nigeria suffocating.”

He noted that there were a lot of independent companies who are keen on the West African Transform margin that might want to bid for assets.

He explained that the Benin Basin, where the seven Deep Offshore blocks are located is part of the West African Transform margin -the cretaceous basin that is older than the Niger Delta, which holds significant volume of oil.

Sharing the same line of thought as Akinosho, a top official at Nigerian Agip Oil Company, who pleaded anonymity, said he perceived that the IOCs would be restrained to bid and buy from the new Deep Offshore blocks put on sale, citing inclement business environment in Nigeria.

He maintained that instead of the IOCs bidding for the assets, Asian and Nigerian independents would be more willing to acquire the assets but would still have to do so through some partnerships with the IOCs.

He also expressed concerns that  some of the seven Deep Offshore assets now on sale are tied to some domestic responsibilities similar to the 2007 bid round, which he noted was tied technically to some domestic concerns and would further reduce the interests of the experienced IOCs in the assets.

The Agip official said, “The truth of the matter is that there would be a restraint on the part of the key operators. Of course, there would be Nigerian indigenous operators that may want to come in and bid, but any indigenous company bidding will still need some of the IOCs to partner with.

“But does the environment now still support companies bidding for these assets? And I can see that some of those assets are tied to some domestic responsibilities just like a bid round that took place around 2007 was tied technically to some domestic concerns. So if you as a bidder accept that responsibility, will you be able to implement some of those things with the circumstance? That’s why a lot of these experienced companies (IOCs) will be having some doubts about the possibility.”

On his part, the Subsurface Manager at Energy and Mineral Resources Limited, an oil service firm, Mr. Collins Ibekwe, said there would definitely be bidders and eventual winners of the assets from both the IOCs, Asian and Nigerian independent firms, adding that bidders would express interest in the assets based on what they believe the geological data was telling them.

“Investors are driven by a primary objective which is to find assets that present good commercial opportunities. I think that IOCs, Asian companies, and Nigerian independents will all be keenly looking for such assets, “he said.