The Nigerian National Petroleum Corporation (NNPC) has said the Nigerian government will put marginal oilfields up for auction in spite of the slump in oil prices.
Mele Kyari, the NNPC chief, made the declaration on Tuesday in a web conference put together by the Ministry of Finance and the UK Department for International Development Partnership to Engage, Reform and Learn.
He stated that government would not be able to holds oilfield bid rounds until prices recover as the current market situation might dampen foreign investors’ appetite.
“Marginal oilfields by their very nature, require very small-scale investment. Countries normally do this (licensing round) to encourage local participation and this local participation are usually funded by local borrowings because the scale of investment is not huge.
“So, you can typically do a marginal fields bid round even when oil prices are low because their costs of production are usually lower; they don’t need huge capital outlay. It is possible to do a marginal fields bid round this period,” Mr Kyari said.
The Group Managing Director of the NNPC further noted that now is not the appropriate moment to invite foreign investors to take part in any bid round, noting that prices would be priced low just as interest would equally be low.
“You are not likely to end up with the big players when you start a bid round under very low crude oil prices.
“I know we will go ahead with the marginal fields bid round, but will have to delay the substantive bid round to a later date.”
Nigeria has not conducted any licensing round since 2007. A marginal field round was last held in 2003.
Kyari added that the Petroleum Industry Bill to overhaul the country’s oil and gas industry was expected to be passed in the next three to four months.
Ben Akabueze, Director-General of the Budget Office, said at the virtual session that government would hasten marginal fields licensing as well as the renewal of expiring oil mining licenses in order to increase revenue.