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FG kick-starts process for sale small oilfields to domestic operators

By The Rainbow

Nigeria will offer 31 licences to domestic operators next month for oilfields with volumes too low for bigger companies as Abuja looks to broaden the range of industry investors.

Sixteen onshore fields and 15 in shallow-water leases would be auctioned, Petroleum Minister Diezani Alison-Madueke said on Thursday.

'Government encourages companies where possible to bid in consortia to enable the parties to leverage upon each other's strengths,' she said, adding that there would be three-and-a-half months of competitive bidding.

The fields produce volumes too low to be profitable for companies like Royal Dutch Shell and Exxon Mobil, who run ventures with the state-run Nigerian National Petroleum Corporation

Alison-Madueke, said in Abuja that 16 of oil blocks were located onshore, while the other 15 were in the continental shelf of the country's Niger Delta.

According to her,  though the process took so long to take off, after the decision was taken since 2010, government is encouraged to go ahead with the process by the achievements of some of the indigenous companies that won oil blocks during the 2001 bid round.

Out of the 24 marginal oil fields on offer to 31 Nigerian companies that participated in the bid in 2003, the minister said eight were currently producing, while the remaining ones were at various stages of development.

'The successful companies currently contribute about one per cent to the country's daily production capacity, with additional discoveries in excess of over 100 million barrels to the national reserve,' the minister said.

Out of the eight assets that have so far been divested from by the multinational oil operators, four were being held by active marginal field operators, who have continued to demonstrate technical ability in operating significantly larger assets.

She said the achievements of these indigenous operators, especially in the upstream sector of the petroleum industry, have justified the Nigerian Content initiatives, adding that this has necessitated the launch of another bid round to open up the oil and gas industry for a wider participation by indigenous marginal field operators.

In line with the bid process, she said the Department of Petroleum Resources, DPR, would, within the next two weeks, undertake a road show to different parts of the country to enlighten stakeholders about the exercise.

The road show, she said, would be followed by a three and half months period of competitive bidding process that would conform with government's commitment to transparency and openness in the bid for the country's assets process in the.

During the bid, she said government would ensure that proper technical and commercial due diligence are carried out on the companies that would indicate interest in the oil blocks, adding that to encourage prospective bidders to participate in the process, government would want them to do so in consortia to enable the parties leverage on each others' strengths.