The Federal Government will offer marginal oil fields for auction this year despite the crash in petroleum prices, the Group director of the Nigerian National Petroleum Corporation, Mele Kyari, has said.
The country has not conducted any licensing round since 2007, while a marginal fields round was last held in 2003.
Kyari said the govt wouldn’t be ready to conduct any major licensing round because the current market realities would dampen foreign investors’ appetite.
He spoke on Tuesday during a virtual dialogue session on government economic policy decisions in response to the present challenges organised by the Ministry of Finance and therefore the UK Department for International Development Partnership to interact , Reform and Learn.
He said, “Marginal fields by their very nature, require very small-scale investment. Countries normally do that (licensing round) to encourage local participation and this local participation are usually funded by local borrowings because the size of investment isn’t huge.
“So, you’ll 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’s possible to try to to a marginal fields bid round this era .”
Kyari ruled out the likelihood of conducting “a substantive, full-scale licensing round, where you need foreign investments”.
He said, “This isn’t the simplest time to call foreign investors to participate in any bid round. The licences are going to be priced very low, and even the appetite are going to be very low.
“You aren’t likely to finish up with the large players once you start a bid round under very low petroleum prices.
“I know we’ll plow ahead with the marginal fields bid round, but will need to delay the substantive bid round to a later date.”
The Director General, Budget Office of the Federation, Ben Akabueze, in his presentation at the event, said the govt would accelerate marginal fields licensing and renewal of expiring oil mining licences as a part of measures to reinforce revenues.
In a related development, the international oil benchmark, Brent crude, rose by $4.23 to $31.43 per barrel on Tuesday.