Colombia is reviving its oil and gas sector through auctioning of oil blocks, starting February 2019 and Nigeria may learn a few things from how the Latin American country is going about it.
The South American country has shifted to open-acreage license system for auctioning oil blocks, said Luis Miguel Morelli, president of the nation’s national hydrocarbon resources administrator ANH. Colombia used to offer specific blocks in different rounds, now it will offer the flexibility of selecting blocks to bidders or developers, Bloomberg reported.
“The idea is to start signing contracts again. Colombia has not signed any exploration and production contract in the last 4 years” Miguel said.
Colombia hopes to sign at least 30 new contracts under the new auctioning method. The Latin American country plans to increase its production to 900,000 barrel per day in current year from 850,000 bpd last year.
Colombia has been awarding blocks to the highest bidder every two to three years, but bidding in the new system will privilege the first company that requests access to additional areas.
In Nigeria, the last bid round took place in 2011 and there has been calls from oil majors such as Total Plc for the government to organise one, in order to grow Nigeria’s oil reverses which has stagnated at 37 billion barrels of oil for many decades.
“I hope the new government that will come after the election will launch new tenders for awarding new exploration licenses” Patrick Pouyanne, chief executive officer of Total Plc said.
Total is one of the biggest players in the African oil sector, holding more proven reserves on the continent than any of the other top global oil companies. Total’s 200 thousand barrels per day Egina in Nigeria has started production and will export three cargoes of three million barrels of crude each in February.
The 60,000 barrels-per-day (bpd) Ikike project is one of several projects the group has earmarked in Nigeria for a final investment decision, including the 70,000 bpd deepwater Preowei project, which would help Total increase its oil production.
According to BusinessDay’s Feb. 12 report, the Department of Petroleum Resources, the oil sector regulator, charged with the responsibility of conducting the bid rounds was not ready to conduct the bid rounds slated for the first quarter of 2019.
“The DPR is not anywhere close to concluding preparations for the next bid rounds, in fact from all indications, it does not seem it will happen any time soon, because the guidance notes for the bid rounds are not even prepared yet. It does not even look like it could happen this year,” said a source that preferred anonymity.
Nigeria was betting to fund infrastructure from proceeds of oil licensing round. A source said that Ibe Kachikwu, the minister of state for petroleum resources is seeking to raise $5billion from the current oil licensing rounds.
However, with the election season capturing public imagination, the likelihood that the licensing round would hold, seem more unlikely.
STEPHEN ONYEKWELU
