Federal Government yesterday announced that it would auction 45 oil blocks in the 2007 bid round, but insisted that the bona-fide bidders must deposit 50 per cent of the offered Signature Bonus at the bidding conference which has been scheduled to take place on May 3.
Minister of Energy, Dr. Edmund Daukoru, who stated this yesterday, while addressing investors on the guidelines for the bid round, explained that the government, in the past had not been serious with the collecting of the statutory 50 per cent non-refundable deposit upfront because it reasoned that it would not be in the favour of indigenous operators, in view of its policy for increased indigenous participation in the oil and gas industry.
He however stated that the balance would be collected on or before the signing of the Production Sharing Contracts (PSC)
According to him, the blocs to be auctioned would come from the Inland Basins , Niger Delta, Onshore, Shallow Water and Deep Offshore, adding that some of the blocs are were, while some were retrieved from the former owners due to their failure to develop them a long after they were awarded them.
�We propose to offer some forty five blocs in this round selected from the various prospective basins of Niger Delta, the deep offshore and the inland basins. The Niger Delta and Nigeria �s deep offshore contain some of the most prolific hydrocarbon basins in the world. We are offering virgin new-minted blocks as well as recycled blocks retrieved from the former owners, who we have ascertained after good dialogue and detailed review, have not diligently operated these blocks.
�it has become a regular exercise on an annual basis and operators have now come to understand that you cant just sit on a valuable asset without doing something. This has given impetus for greater activity of the blocks currently held.
�Because of the complaints of the previous bid rounds, we had to go back and restructure everything. Now the bid round is ready for delivery, and we hope that all the toil and effort put into it would deliver a product that is would meet investors aspirations�, he said.
He explained that government delayed the bid round following the restructuring which it was embarking upon, adding that he personally stipulated the guidelines to cut short on the experiences of past bid rounds, where some bidders claimed to be unaware of certain requirements for participation.
�We have to do this explanation because sometimes, we think we are going too fast, and with all the efforts we make, at the end of the day, we still have a lot of complaints.
�In an exercise like this, not everybody will be a winner. Some will be losers. Losers don�t often take kindly to losing, and sometimes they try to overturn what they had clearly understood as if they did not understand.�
The Minister stated this bid round was being organized to meet government�s aspirations in terms of growing reserve, growing production capacity, harness and monetize gas resources as best as possible and to �pursue strategic development, which otherwise, would have required funding and support.�
�In our determination at ensuring that Nigeria benefits from the best available state-of-the art technology/expertise in petroleum/gas acreage development and production, as well as to attract very credible foreign and indeed indigenous investors with the requisite financial wherewithal, we are once more employing the electronic instant bidding system and web based dissemination package.
�However, due to time limitation, we are not in a position to undertake extensive road shows as was the case in 2005. Instead we intend to carry out a limited number of road shows and one�one interactions in London and Houston only during the middle of April 2007. We will augment this efforts with enhanced personal and internet interaction, which shall be available from today both at my office and the Department of Petroleum Resources (DPR).
�Due to success of the linkage of upstream and downstream in the 2005 bid round and the 2006 mini-round, we want to continue the process of encouraging downstream investment in 2007 bid round. In this regard, special preference will be given to companies investing in Nigeria �s downstream through granting of the right of first refusal to specific blocks to such companies that present credible downstream projects, which they have already embarked upon or will embark upon within 18 months of the award of the blocs.
�Such projects as refineries, petrochemical plants, IPPs, gas gathering and gas development infrastructure are encouraged together with development in the linked sectors of our economy such as transportation, agriculture and power etc� he said.
The minister further noted that the number of blocs involved may likely to reduce as the process for qualification will be quite rigorous, adding, �we will publish the list of qualifying companies in due course, after requisite approval has bee obtained�.
He stated that the local participation policy has been revised in line with the audit recommendation of the 2005 exercise, saying, in the current bid round, investors shall incorporate their own local partners in one entity rather than the government presenting any partners to the investors.
�Furthermore, in line with the recommendation of the review panel, we have reduce the bidding parameters from four to one, signature bonus only, while the other three parameters are fixed� he added.
Speaking in the same vein, the DPR Director, Mr. Tony Chukwueke, explained that the number of blocks was slashed from the initial 60 to 45, because it would not have been possible to conduct the exercise for 60 blocks within the one month period.
On the right of refusal adopted by government, he said, it was based on the bilateral relationship between Nigerian government and governments of the investing entities.
Chukwueke also stated that every company that is bidding is to incorporate with it, a local content partner, even as he declared that only drafts from Nigerian banks will be acceptable.
With the arrangement in place a bidder will be paying at least $145,000, representing prying fees, registration cost and data acquisition from the DPR.
Apr42007