Business & Economy - News - Oil & Gas - June 25, 2022

2020 oil bid round: Finally, Nigerian govt. set to issue licenses to winners

By Bassey Udo

After months of delay since the conclusion of the 2020 marginal oil field licensing bid round, the Federal Government says it is set to issue prospecting licenses to companies that emerged winners in that exercise.

The upstream petroleum industry regulator, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) which disclosed this on Saturday in Abuja said the licenses would be issued on Tuesday.

In 2020, the defunct Department of Petroleum Resources (DPR) had published a request for the submission of expression of interest by prospective bidders for the award of prospecting licenses to operate the 57 marginal oil fields included in the basket of acreages on offer under the marginal oil bid round.

Following the publication, the DPR confirmed harvesting a total of 665 applications from various prospective investors.

The evaluation of the total applications that met the stipulated bid guidelines resulted in the shortlist of 161 applicants pre-qualified to proceed to the technical and financial bid exercise.

At the end of the bid, 128 companies emerged as successful bidders and were expected to make payments for their signature bonuses within 45 working days from the date of the bid.

However, at the close of the payment window, the NUPRC, which succeeded the DPR following the enactment of the PIA 2021, announced that full payments were received from 119 awardees, with nine others making part payments, while 33 others did not meet the deadline for the payment.

The winners that failed to pay their signature bonuses forfeited their licenses to qualified reserve bidders in line with stipulated bid guidelines.

About N174 billion was said to have been realised from the exercise.

Regardless, the upstream petroleum industry regulator said various challenges thrown up by the bid process not only hindered the close-out of the exercise, but also delayed the issuance of the operational licenses to the winners to enable them commence operations.

Part of the challenges, the NUPRC said, was the delay by some of the winners to complete the payment of their signature bonuses within the deadline, resulting in the regulator issuing a public notice to the awardees to inform them of its desire to close out the bid process as soon as possible.

In line with its resolve, the Commission constituted an in-house work team to identify and redress the concerns of awardees affecting multiple awardees per asset and formation of Special Purpose Vehicles (SPV) by awardees in line with the respective letters of award.

Consequently, awardees were enjoined to avail themselves of the resolution mechanism provided by the Commission in the overriding national interest to move the process forward.

The Chief Executive Officer of the NUPRC, Gbenga Komolafe, said the successful resolution of the issues culminated in the emergence of the successful awardees to be issued Petroleum Prospecting Licences (PPL) on Tuesday.

Komolafe said the licenses would be issued pursuant to the provisions of the Petroleum Industry Act (PIA), 2021.

On May 31, 2021, the defunct DPR had issued letters of award to investors to commence oil, and gas exploration and production from the 57 marginal oil fields.

Some of the firms that were issued letters of award include A.A Rano Nigeria Limited, Duchess Energy and Emadeb Energy Services Limited, Matrix Energy Limited, Shafa Exploration and Production Company Limited, Kasiva Limited, DuPaul Mainstream Company Limited and Vhelbherg Exploration and Production Development Company Limited.

Also, the NUPRC CEO said the occasion would be used to unveil the template for the implementation of the Host Communities Development Trust.

The unveiling of the template would mark the commencement of the provisions under Section 235 of the PIA, 2021, against restiveness in the host communities, guarantee seamless operations, boost investors’ confidence and provide enabling environment for sustainable development of the country’s hydrocarbon resources.

Komolafe said these would mark the conclusion of some of the most urgent and critical tasks inherited by the Commission following its inauguration in October 2021, after the signing into law of the PIA 2021.

The concept of marginal oil field allocation was conceived to promote more participation of indigenous operators in the upstream sector of the country’s oil and gas industry.

Also, the objective was to boost the oil and gas production capacity, enhance the country’s oil and gas reserves, encourage capital inflow, generate employment and build local capacity in the country’s oil and gas industry.

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