Petroleum Africa
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Tuesday, May 15, 2007
Nigeria’s third licensing round in three years followed in the foot steps of the two previous exercises, coming in short of expectations on several fronts. Two last minute road shows and the prospects of continuity of government policies following the ruling party’s win at the April polls could not reverse the initial skepticism that greeted the announcement of the bid round in early April.
Of the 45 blocks advertised, only 19 were picked up at the end of the day. Four of them, OPLs 2001 – 2004, were already stymied before the exercise opened, no thanks to a last minute court injunction by Shell which is laying claims to them. Neither would the bidders touch all of the 11 blocks in the less prospective basins of Anambra, Benue, and Chad with a long pole. That effectively assured that a third of the blocks on offer were not saleable at least on this day.
Five of the 19 winners had their bids nullified for various infractions ranging from the use of personal checks to make down payments to lower-than-expected bid amounts. Thus, with just about a third of the total blocks on offer being validly won, the government’s pre-bid estimates of raking in over $500 million on down payments alone fell far short by half. Total bid inflow was $532 million from which a little over $266 million was expected in down payments. And that was subject to the two companies being given a 48-hour grace period to make good their pledge.
Significantly, the IOCs for the first time in Nigeria’s licensing history put up a total no-show. Reasons being touted range from the Niger Delta crises to the Nigerian government’s new found love for Asian NOCs. But when viewed against the equally significant fact that none of the Asians showed up in spite of their preferential rights of first refusal, there has to be more digging for these answers.
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Dangote Oil and Gas, the only local company with a right of first refusal was out-bid by far on both blocks by Conoil and her associates. The duo of Conoil/ECL International Ltd emerged the highest bidder in OPL 290 with $105 million surpassing the minimum signature bonus of $20 million, where Dangote bid $21 million and Amber Petroleum bid $50 million. In OPL 2007, Conoil was the highest bidder at $110 against Dangote’s $31 million. Electing to exercise their rights on both blocks, the company was given 48 working hours, up till Tuesday May15, to match and deposit 50% of the Conoil bids or forfeit the blocks to Conoil.
And the winners were….
Bayelsa Oil Company Limited, OPL 240, Cost $10.6M
Conoil/Ecl International, OPL 290 Cost $105.0M (Subject to Dangote)
Essar Exploration & Production, OPL 226, Cost $37.0M
Global Energy OPL 2009, Cost $11.5M
Moni Pulo OPL 239, Cost $26.5M
Moni Pulo OPL 234, Cost $6.5
Oil World OPL 241, Cost $20.2
Pan Ocean Oil Corporation OPL 275 $10.0M
Sahara Energy OPL 228, $6.25M
Ten Oil Petroleum OPL 2008 , $12.0
Yorkshire OPL 258, $60.0 M
Yorkshire OPL 295, $105.0M
Bids that were nullified included those by Sahara Energy on OPL 228, Ten Oil Production on OPL 2008, and Yorkshire on OPLs 258 and 295.
Lagos, Nigeria. Petroleum Africa, All rights reserved.
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