In a bid to attract fresh investments and ramp up oil output, the Federal Government yesterday, announced the removal of the signature bonus requirement in bidding for oil blocks.
Minister of State for Petroleum Resources, and Oil, Mr. Heineken Lokpobiri, disclosed this on the sidelines of the ongoing 2024 Offshore Technology Conference, OTC, in Houston, Texas.
A signature bonus is a single, non-recoverable lump sum payment made upfront by oil companies to the government for the rights to develop an oil block commercially after successfully winning in the license bid round.
The minister assured investors that oil will remain relevant in Nigeria’s economy for a long time and that the government is creating an enabling environment that will attract the best of investments into the country.
Lokpobiri, who urged investors to take the opportunity of the oil bid round to make an investment, said: “Historically, no source of energy goes away. So, do not be deceived that fossil fuel will go away. Discourse at the recent global conferences has further proved that fossil fuel will continue to remain, the quicker we extract our oil, the better for us as a country.
“We are here at OTC to show the rest of the world that Nigeria is different and our government is different, in creating the best regulatory framework, allowing competitiveness, and removing all the investment barriers.
“Today, we are restoring investment confidence in the sector and ensuring investors can bring in their funds without worries. This will show to the world that Nigeria is ready for business.”
Announcing the removal of the signature bonus, Lokpobiri said over the years, payment of signature bonuses remained a huge bottleneck for investors as well as investment into the sector.
“Stakeholders had explained that globally, payable signature bonuses by awardees of an oil bloc or marginal field rank highest in Nigeria. On many occasions, the huge amount involved in payment of signature bonus was a setback for investors,’’ the minister added.
In his remarks, the Chief Executive Officer, Nigerian Upstream Petroleum Regulatory Commission, NUPRC, Engr. Gbenga Komolafe, said the recent Presidential Executive Orders issued in March this year, were aimed at improving the efficiency and attractiveness of Nigeria’s oil and gas sector.
He added that it would culminate in further increasing the nation’s oil and gas reserves, currently standing at 37.5 billion barrels of crude oil and condensate reserves and 209.26 trillion cubic feet of natural gas reserves.
Komolafe said: “The exercise, which was initially announced on the 29th of April 2024, is a significant leap in our strategic hydrocarbons development initiative. This round introduces twelve meticulously selected blocks across diverse geological spectra — from the fertile onshore basins to the promising continental shelves and the untapped depths of our deep offshore territories.
‘’Each block has been chosen for its potential to bolster our national reserves and stimulate economic vitality. Our approach is underpinned by the robust legal framework of the Petroleum Industry Act 2021(PIA), which ensures compliance with best practices to boost investors’ confidence.
‘’In keeping with the provisions of the PIA and regulations made under the Act, the commission has issued a licensing round guideline and published a licensing round plan for the twelve blocks (namely PPL 300-CS; PPL 301-CS; PPL 3008; PPL 3009; PPL 2001; PPL 2002; PML 51; PPL 267; PPL 268; PPL 269; PPL 270; and PPL 271).
“In addition to these blocks, the seven deep offshore blocks from the 2022 Mini-Bid Round Exercise which cover an area of approximately 6,700 km2 in water depths of 1,150m to 3,100m shall also be concluded along with this licensing round.’’
A total of 57 fields were on offer with 665 companies indicating interest to acquire them.
Meanwhile, the Executive Chairman, Lee Engineering and Construction Company, Chief Leemon Ikpea, has said indigenous companies are ready to acquire assets of International Oil Companies, IOCs, under divestment.
He said: “I can rightly assure Nigerians that indigenous companies have the capacity and are ready to double the investment of these divested assets. What is important for us is collaboration as well to bridge the gap. Great minds and not portfolio investors are spanning from indigenous operators and you will be surprised at what they can pool and grow these investments.
“Indeed, following the Federal Government of Nigeria’s commitment to the Nigerian Local Content Act, which seeks to promote indigenous technological capabilities in the oil and gas sector, Lee Engineering is currently building a gigantic, next-generation production facility in Warri, Delta State, Nigeria, to be commissioned soon.
“The facility has an installed capacity to manufacture high-volume industry equipment such as pressure vessels, heat exchangers, process skids, tanks and other oil and gas tools that will help transform the industry. The investment in the gigantic fabrication facility is estimated to be worth over 200 million dollars.
“However, there is a need for continuous government support and incentives to drive this needed objective for indigenous operators, which will in return discourage capital flight and strengthen the country’s currency for profitability and economic recovery.”
