At a time economic crunch is biting hard, the irony of it all is that the country may be literally sitting on a huge petro-dollar wealth enough to turn the current economic quagmire.

With a maximum crude oil production capacity of 2.5 million barrels per day, Nigeria ranks has Africa’s largest producer of oil and the sixth largest oil producing country in the world, but is still largely-import dependent.

Investigation by The Nation revealed that Nigeria has a total of 159 oil fields and 1481 wells in operation. With many other countries extending efforts to ramp up their oil and gas production and reserves, industry experts have voiced concerns about the lack of oil licensing rounds in Nigerian since 2008.

Crux of the matter

Out of 390 oil blocks in the country, 211 are yet to be allocated by the federal government, latest data obtained from the Department of Petroleum Resources have shown.

Besides, 179 blocks have been allocated as of December 2017, comprising 111 Oil Mining Leases and 68 Oil Prospecting Licences. The country has seven basins, namely Anambra, Benin, Benue, Bida, Chad, Niger Delta and Sokoto.

In Anambra, 12 out of 19 blocks have not been allocated; in Benin, 39 out of 50 are open; in Benue, 41 out of 43 are still idle, while none of the 17 blocks in Bida has been allocated.

In Chad basin, 40 out of 46 blocks are open; in the oil-rich Niger Delta, 34 out of 187 blocks are still idle, while Sokoto’s 28 blocks remain unallocated.

During the twilight of the Kachikwu administration, he hinted of plans to do oil license bid rounds, noting that things would definitely look up for the sector once this is done but he however did not give a timeline.

When our correspondent sought the views of industry players, they lamented what they described as inertia in the sector, saying those who hold the levers of the economy as far as the nation’s oil wealth is concerned are not doing enough.

The implication is that the country’s oil-wealth may have been adversely affected as there has been loss of revenue due to the inability of the government to do fresh bid rounds in the oil and gas sector.

No longer at ease with idle oil blocks

Speaking in a telephone interview with The Nation, Toyin Akinosho, a petroleum geologist with over two decades of work at Chevron, has an entirely different view.

According to him, he would rather concerted efforts are made towards getting existing oil blocks up and running as against doing another bidding rounds.

“My own challenge basically, is that there is not enough work going on even oil blocks that have been licensed in the last 11 years. The ones that were granted between 2005 and 2007, there is not a lot of work going on there. You understand. There is not what you might call adequate oversight by the regulatory authorities on those ones. So, I’m not a fan of lying up for new bid rounds, when you really are not actively working on the ones that has been licensed. That’s really my own challenge. That’s my opinion. I’m not lying up behind fresh bid rounds,” he said.

Short of accusing the DPR, which is the regulatory arm of government in the nation’s oil and gas sector, of predilection of duty Akinosho said, it is rather scandalous that not much was going on in terms of supervision and oversight.

Akinosho, now publisher of the Africa Oil +Gas Report, was however to admit that, “Wherever you have a bid round, there is a lot of activities, people pay money for even just going to take applications, government rakes in a lot of money, but the point is, what is important is for us to work the existing assets and generate production that would add money to the economy.”

Expatiating, he said, of the over 40 OML that were granted between 2005 and 2007, only two had basically actively worked anything up.

Raising some posers, he queried, “So if people are sitting on their assets, why should we be licensing more people? I don’t understand that? That’s my own perspective.”

Also speaking in an interview with The Nation at the weekend, the pioneer National President of the Private Depot of Oil and Gas Marketers Association of Nigeria (PDOGMAN), Chief (Dr.) Kolawole Adewoyin, said those unallocated blocks should be awarded to serious-minded investors, “instead of allocating blocks to individuals who eventually will not have the financial muscle to do anything meaningful.”

According to him, many OPLs had not been able to get to the point of being converted to OMLs because of the high level of capital required.

An OPL gives its holder the exclusive right to explore for and develop oil and gas within a defined area while an OML gives its holder the exclusive right to explore for, develop and produce oil and gas within a defined area.

He said, “If you end up not finding oil in commercial quantities after prospecting, all the losses will be incurred by you. That is why we keep advising that people should not just go into the oil and gas business without having some simple education.

“By the time they now understand what it takes, they are stuck in the middle of the road; they can’t return the blocks to the government to collect their money back and they did not find people to partner with, and so they will leave the blocks fallow. That is exactly what is happening.”

While reiterating the Association’s commitment towards driving the oil and gas sector, the Group Managing Director/Chief Executive of AA Adewoyin Petroleum said, PDOGMAN, which has a mandate to buy and sell/distribute petroleum products from all private depots across Nigeria, noted that the sector has benefitted immensely from favourable policies under the current administration.

In the view of Chichi Emenike, who, heads oil and gas, Ventures at Neconde Energy Limited, many other countries within the sub-region have left Nigeria behind.

Speaking in an interview with our correspondent, she said, it remains to be seen how the country would grow her oil and gas sector if no decisive effort is made to put in the right policy drive.

Best practices

Whereas Nigeria is still lagging behind, offshore exploration and field development are steadily growing throughout sub-Saharan Africa, with numerous licensing rounds under way in all parts of the continent, with various countries hoping to attract to capitalise on recent giant discoveries in nearby frontier basins. More established petroleum producers such as Angola are introducing measures to revive oilfield development.

The long list of African countries opening offshore blocks to licensing is probably unprecedented, with Gabon and Somalia already under way with international road shows. Others contemplating or preparing for new rounds include Angola, Republic of Congo, Côte d’Ivoire, Ghana, Guinea, Madagascar (for the first time offshore), Mauritania, Nigeria, Senegal, and Sierra Leone.

Nigeria will account for over 34% of proposed capex on crude and natural gas projects in Sub-Saharan Africa during 2018-2025, according to a recent report by GlobalData as a consultant predicted that up to 28 new projects could go forward over this period, most already announced, as the country seeks to raise its oil and gas production. The next most intensive arena for development will likely be Angola where five projects are set to come on stream by 2025.

Something to cheer about

According to the Department of Petroleum Resources (DPR) there is 13 billion barrels of crue oil Nigeria’s deepwater terrain and current daily production of 850,000 barrels from the 2 billion barrels of oil explored and developed fields.

Deepwater oil blocks are those located in areas of water depth beyond 200 metres and extending up to 200 nautical miles seaward from the coasts of Nigeria.

Deepwater producing fields in Nigeria include Akpo,Usan and Egina of Total E&P Nigerias, Bonga of Shell Nigeria Exploration and Production Company, Agbami of Chevron Nigeria Limited among others.

Total has for almost a decade been extracting oil from a third field in the block, Akpo. It holds a 24 percent stake in the block’s lease and is the operator. Its partners are state-owned Nigerian National Petroleum Corp, China’s CNOOC, Brazil’s Petrobras and private Nigerian firm Sapetro.

Data obtained from GlobalData Upstream Analytics shows also that Nigeria holds the top spot among the ten countries with the largest remaining crude oil and condensate deepwater reserves, with 5.038 billion barrels expected to be economically recovered in the country. The US, Angola and Brazil follow with 4.739 billion barrels, 4.495bn barrels and 3.524bn barrels respectively.

GlobalData estimates that the top ten countries hold a total of 25.881bn barrels of economically recoverable oil reserves.

“DPR as a regulator, working with other stakeholders including the Nigerian National Petroleum Corporation (NNPC), decided to go into deep water, when the inland and the offshore was already saturated. The only way to do that was to come up with Production Sharing Contract (PSC) agreement, and that was how 83 blocks were mapped in Nigeria deep water and 30 of the blocks was awarded. Eight of the blocks were awarded in 1993, eight in 2000 and other 14 in 2015.”

Nigeria has 83 deepwater oil and gas blocks out of which 30 have been awarded and eight blocks out of the 30, are oil mining leases (OMLs) that have begun production, with 53 open blocks yet to be awarded.

According to DPR, Nigeria has about 13 billion reserves for deepwater with only two billion barrels explored with current production capacity of 3.2 billion barrels of oil from a target of four million barrels

To unlock the huge potential in the deepwater, the DPR said the Federal Government will have to create more attractive fiscal and regulatory regime, incentives based on reserves replacement, ensure accelerated lease renewals and encourage deep play exploration and reserves maturation.

Experts say with Production Sharing Contract (PSC) agreement, 83 blocks were mapped in Nigeria’s deep water and 30 of the blocks were awarded. Eight of the blocks were awarded in 1993, eight in 2000 and other 14 in 2015.

It is however instructive to note that Chief Timipre Sylva, Minister of State for Petroleum, has given blessed assurances of a virile oil and gas sector under his administration. Whether this is wishful thinking or sure reality? Time will tell. (The Nation)

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