Director Department of Petroleum Resources DPR, Sarki Auwalu said that DPR expects to have all completed bids for marginal oil wells within 10 weeks. It will be recalled that on Monday, the DPRl aunched its first bidding round for marginal fields – smaller blocks typically developed by domestic companies – in nearly 20 years. It hopes the round will boost oil output and bring in much needed revenues.
Auwalu said “the process is within 10 weeks. We feel that now it is time to open up again. There is an appetite to invest in Nigeria, particularly in marginal fields, because the cost of development is small, so it is profitable.” Auwalu said none of the fields being awarded were facing legal issues, but courts have blocked two fields that were revoked in April from being included in any new licensing round. Sources have said other legal challenges were expected from those holding 11 licenses revoked in April. He said Nigeria is implementing the full cut it agreed to under the OPEC+ deal, but that the high volume of condensates Nigeria produces makes its oil exports appear higher than they are. Condensates are an ultra-light oil that are not counted as part of OPEC cuts.
Auwalu said some fields with a particularly large condensate output could “go further to reduce the condensate volume”. He said that efforts to cut flared gas have been delayed by at least 6 weeks due to the new coronavirus outbreak. Nigeria is trying to commercialise the gas that is currently burned at its wells as waste so that it can be exported or used for power generation. Nigeria is one of the top ten gas-flaring countries in the world; it flared some 7.4 billion cubic feet in 2018, according to accounting firm PwC. The country estimates that it loses $1 billion in revenue annually due to flaring, which also adds to extreme environmental pollution in the Niger Delta region.
But Auwalu said the current bidding round had been delayed due to travel restrictions aimed at stemming the spread of the virus. “What is holding (up) the programme is COVID-19. Because (the bidders) need access to the flare points…, they have to go and see (them) physically,” he said. “We had to officially extend the programme by six weeks.” Nigeria’s gas flare commercialisation programme was approved in 2016, and the DPR held a round for companies wanting to bid on the opportunity to commercialise 96 flare points in February. Submissions for the bids were due in early April. Auwalu said some 200 companies had joined the process.
