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Dangote, Zenon, Conoil Jostle for Oil Blocks , 75 blocks on offer, deadline extended

Source: This Day on line 6/21/2005, Location: Africa

One hundred and sixty-five multi-national and local companies have picked up bid packages to seek allocation of 75 oil blocks by the Federal Government.Top indigenous companies including Alhaji Aliko Dangote's Equity Energy Resources (EER), Dr. Mike Adenuga's Conoil, Femi Otedola's Zenon Petroleum Company and Walter Smith Petroman promoted by Mallam Isa Abdulrasaq, are leading the local challenge for the award of the oil blocks which the Federal Government has promised would be highly competitive.

A further breakdown of the registration profile showed that the five traditional multi-national oil companies namely Shell, ExxonMobil, Chevron, Total and Eni, are also in the race for the licenses, while a total of 31 indigenous companies have already applied. Seventy Nigerian companies also applied to be alloted 10 per cent equity in the blocks under the Federal Government Local Content Vehicle (LCV) policy.

Briefing newsmen at the weekend in Lagos on the Bid Round, the Presidential Adviser on Petroleum and Energy, Dr. Edmund Daukoru, said a total of 275 bid packages were taken by 165 companies, which means that some companies picked up more than one package.

One package represents a bid for one oil block.

Daukoru said the Federal Government was targeting at least 200 applications, which would also mean more revenue from the licensing round. Application for each bid package cost $10,000 while applicants would also pay another $10,000 processing fee.

Daukoru however, said the deadline for registration originally fixed for last Friday, June 17, has been extended by one week. The shift, he said, was to allow prospective bidders more time to study the package on the 14 additional oil blocks that were added to the bid portfolio last week.

When the bid round was launched last March, the government first offered 61 oil blocks spread across the deep offshore, shallow waters, the onshore and the inland basins. The government said the additional blocks would be available to only companies wishing to establish refineries, power plants and LNG projects in the country. "Because they (the additional blocks) are new in the basket, we believe that we need to give time for prospective bidders to access them, review the data and pry the data. And to some extent, to allow people who live in very far-flung places to be able to respond.

"For all of these reasons we are extending the bid round by one more week without jeopardising the absolute end date.

"We want to have the maximum possible. It is good for government because it means more revenue for government and also the uptake for the round will be the best we have achieved," Daukoru said.

The Nigerian government aims to substantially raise the country's crude oil reserves and production capacity to 40 billion barrels and 4.5 million barrels per day (bpd) respectively, by 2010 through acreage allocated under the 2005 bid round.

Daukoru who also briefed newsmen on why Nigeria supported the last increase in output ceiling agreed to by the Organisation of Petroleum Exporting Countries (OPEC), said that Nigeria is currently producing at 2.4 million bpd and that the Federal Government hoped the increase in the country's official OPEC quota to 2.3 million bpd, would serve as a boost to oil operators in the country to invest more in oil exploration.

"We (OPEC) intervened because when price rises to a certain level it is beginning to affect global economy and to the extent that we are part of the global community we suffer when global economy is affected.

"To the extent that high oil will trigger off recourse to alternative sources of energy - wind energy, solar energy, biomass, development of hybrid auto engines, development of tar sands, all of these possibilities get to be embarked upon by consuming nations when oil price is excessively high.

"And as they embark on these programmes, OPEC countries cannot drink their oil. We need market for our oil so OPEC strategy is to say, let's be high enough for good revenues for producing countries and also bring revenue to re-invest but not so high that competing alternative fuel starts to be developed.

"The good thing about legitimising what we are already doing, is that it gives added confidence to private operators in the country who on the average are controlling 40 per cent of production, with NNPC controlling 60 per cent. It gives them the added confidence to go after that additional barrel, whether it means they have to go and rehabilitate vandalised equipment, repair some moribund pipeline... All of those things become possible when you give the operator that added confidence," he said.

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