Nigeria is to now to allow the private sector explore for oil in the North East region of the country, according to a new strategy being worked out by the ministry of petroleum resources.
Ibe Kachikwu, minister of state for petroleum resources, said on Tuesday that under the new arrangement, the private sector operators will be allowed to explore for oil in the region at their own cost, under the Product Sharing Contract (PSC) arrangement, while the Federal Government will create policies and incentives to encourage their participation.
“My philosophy is that it shouldn’t be just NNPC that should explore for oil in the North East,” Kachikwu said at the budget breakdown event hosted by the ministry of budget and National Planning in Abuja.
“One of the things that we are trying to do after marginal field round has been approved and gone through, is to begin an inland basin field round and then we put in enough policies and enough incentives to bring in the private sector to look for oil at their own cost under PSC arrangement and therefore, will not be a burden to the Federal Government but at least open up the frontiers for the likelihood of finding oil,” Ibe Kachikwu further explained.
Kachikwu also mentioned that the marginal field bid round, which is being awaited, is awaiting approval from the relevant quarters and will likely commence first quarter of 2018.
The Nigerian National Petroleum Corporation (NNPC) announced in August that the Federal Government will soon open bids to concession 30 marginal oil fields in the country.
Reports say the Federal Government is looking to raise $300m in the process and intends to make investors to pay $300,000 as signature bonus.
The marginal bid round mandates that indigenous companies must have at least 51 per cent of the beneficiary interest in the company, must be registered solely for exploration and production business, to be allowed to participate.
Kachikwu, responding to questions at the event on when the marginal field bid rounds should now be expected, said, “We have started the process, it is going through approval stages now, we had anticipated that the process will kick off sometime this last quarter, hopefully this month or next month, but it is increasingly looking like we may likely complete that process in the first quarter of next year. That is the calendar right now.”
He also explained that the Federal Government would continue to explore for oil in the North East and across the country, even when oil is seemingly, gradually going out of vogue across the world. He said this is because the Federal Government is obligated to do so and that the exploration will continue as long as there is good evidence that oil can be found in that particular part of the country.
He said, “Government will continue to explore for oil for some fundamental reasons. The first is that we have an obligation as nation, to continue to ensure that any part where there is any visible sign at all, of some oil for exploration, we need to follow it through.
“The reality is that the all the studies that have at least been undertaken in the lake Chad Benue trough, show that there is some sense of oil. Infact, across the border in Lake Chad, oil is being produced. So we need to follow that through.
He said the second, is that this does not stop the fact that massive exploration activities continue to proceed in oil producing areas, countries are finding more and more oil everyday. He said for instance if America hadn’t gone into shale oil exploration, they would not have found shale oil and become oil sufficient today.
He further observed that if the contribution of oil in the 2018 budget income expectation would reach almost 60 percent, which means a huge amount of responsibility still lies on oil.
“It means that we must continue to expand the frontiers of revenue for the budget and if we find that some money and some oil exist somewhere that will come to fruition.”
Onyinye Nwachukwu, Abuja
