By Adedapo Adesanya
The Nigerian National Petroleum Corporation (NNPC) has revealed that the Federal Government will auction small oil fields this year to raise funds in the midst of the crisis facing the oil market in terms of price and demand.
The Group Managing Director of the NNPC, Mr Mele Kyari, noted that the country has not conducted any licensing round since 2007.
Mr Kyari, who further said a marginal fields round was last held in 2003, stated that government would not be able to conduct any major licensing round as the current market realities tend to dampen foreign investors’ appetite.
The national oil company executive was speaking during a virtual dialogue session on government fiscal policy decisions in response to the current challenges organised by the Ministry of Finance and the UK Department for International Development Partnership to Engage, Reform and Learn.
He said, “Marginal fields by their very nature, require very small-scale investment.
“Countries normally do this licensing round to encourage local participation and this local participation are usually funded by local borrowings because the scale of investment is not huge.
“So, you can typically do a marginal fields bid round even when oil prices are low because their costs of production are usually lower; they don’t need huge capital outlay.
“It is possible to do a marginal fields bid round this period.”
Speaking further, Mr Kyari ruled out the possibility of conducting a substantive, full-scale licensing round, which requires foreign investments.
He said, “This is not the best time to call foreign investors to participate in any bid round.
“The licences will be priced very low, and even the appetite will be very low.”
Dipo Olowookere