There is an ongoing push recommending good corporate governance structure among indigenous oil companies to give them better opportunities to participate successfully in the 2024 oil bid round.
The Federal Government has initiated preliminary steps for the 2024 petroleum licensing round through its upstream oil and gas industry regulator, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
The Commission recently announced the commencement of the Licensing Round, which is intended to bolster the country's oil production and revenue.
The Licensing Round, offering over 12 selected blocs across diverse geological formations, is expected to attract significant interest from domestic investors and international oil companies (IOCs) and following the calendar of events, is projected to last till January 2025.
At a pre-bid conference in Lagos, Commission Chief Executive of the NUPRC, Gbenga Komolafe, was emphatic that prospective licence winners must be genuine investors who are ready to invest and operate oil blocs won within a limited timeframe to be specified by the commission.
This recent move was a strategic effort to stimulate investment in the sector.
This initiative follows the 2022 mini-bid round, a significant event aimed at attracting investors and boosting sectoral growth.
The government's actions appeared to be part of a broader strategy to create a more favourable investment climate, encouraging both local and international stakeholders to participate actively in the sector.
Such measures are crucial for fostering economic development and leveraging the sector's potential to contribute significantly to the nation's economy.
The success of the 2024 Licensing Round depends on the Commission's ability to create conducive conditions for investment in the country's oil and gas sector.
This responsibility is underscored by the Commission's statutory obligation to promote an enabling environment for investment in upstream petroleum operations, as mandated by the Petroleum Industry Act (PIA).
But, stakeholders are keen at encouraging more local industry participation but which they said must come with proven technical and financial outlay and also verifiable good corporate governance.
At the conference, panelists at two panel sessions spoke on the need for indigenous players to take advantage of the exercise to expand their footprint in the industry.
A panel discussion moderated by the General Manager (GM), Government, Joint Venture & External Relations of Heritage Energy, Sola Adebowo, provided huge insight on experiences and other key requirements that would provide local firms with the opportunities to bid and compete favourably in the ongoing process.
Adabawo shared key strategies that indigenous players need to employ to attract and secure partnerships from new investors to enable effective leverage to the opportunities presented by the licensing round.
His prompting helped the panel to provide pathways to financing options available for oil and gas companies in Nigeria especially for those itching to participate in the exercise.
The panelists, which included Bala Wunti (Chief Upstream Investment Officer (CUIO), NUIMS), Oladapo Filani (CEO, Waltersmith Petroman Oil Ltd), Dr. Nosa Omorodion (Executive Director, SLB), Abiodun Afolabi (Executive Director, Strategy Business & Asset Management, TotalEnergies), Joyce Dimkpa (General Manager and Head of Client Coverage, Stanbic IBTC Bank) and Hans Nijkamp, (Gas & Commercial Director, Shell EP Africa Ltd) deliberated on the key drivers of raising finance in the Nigerian Upstream for potential investments.
Our Correspondent reports that in the light of global competition for investment capital, the fast evolving global reality of energy transition, increasing divestment from the Nigeria energy sector by multinational corporation and a plethora of other issues, sourcing investment funds for hydrocarbon leases has become a critical area of focus for both the government, regulators as well as potential investors in the society.
Stakeholders have been concerned about the purported increase in signature bonuses within Nigeria's oil bid process but the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has addressed this issue.
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He stated that the country has revamped the signature bonus payments required from new investors in the oil and gas sector.
To ensure a smooth transition, signature bonus payments will now be tied to immediate exploration and production activities.
Rather than depositing these payments into the FGN's account, investors must demonstrate their financial capacity to proceed with exploration activities in Nigeria. It is expected that this move by the government will encourage more committed investments, and ultimately enhance the efficiency of oil and gas development in the country.
Investor departures have recently become a significant concern in the oil and gas industry, with IOCs progressively divesting from the country due to challenges such as complexities in engaging with host communities and rampant crude theft in the oil-rich Niger Delta.
However, this shift presents an opportunity for indigenous investors to participate in the Nigerian oil and gas market.
