Oil
Bids on Chevron’s Nigeria oil blocks due next week
PORT HARCOURT – U.S.-based Chevron Corp will receive bids on Sept. 30 from prospective buyers of three oil blocks in the Niger Delta, with several local Nigerian firms in the running, industry sources told reporters on Tuesday.
Oil industry sources estimate the mean value of the three blocks combined at $500 mln to $600 mln and anticipate winning bids will be around those levels.
Chevron said in June it would be selling its 40 percent interest in five onshore blocks, joining Royal Dutch Shell , Italy’s Eni and France’s Total in selling stakes in Niger Delta assets.
U.S. firm ConocoPhillips is also selling its Nigerian assets to Oando Energy for $1.79 billion.
Chevron wants to sell OML 52, 53 and 55 to one buyer and suitors will have to pay 15 percent of bids on Sept. 30, three sources close to the deals told Reuters. The firm will sell two other blocks, OML 82 and OML 85, in a separate bidding process.
The U.S. firm did not respond to a request for comment.
The three blocks have total oil reserves of around 134 million barrels and 5 trillion cubic feet of gas, two sources said. One company was willing to bid $1.7 billion for the assets but it was unlikely it was a credible buyer, the sources said.
Consortium bidders were more likely to be able to raise the financing necessary, sources said, and as with recent sales of Shell oil blocks, Nigerian firms, many in partnership with foreign companies, are likely to win most bids.
Nigeria’s South Atlantic Petroleum (SAPETRO), which already has joint ventures with Total and China’s CNOOC, is expected to bid, as is First Hydrocarbon Nigeria, the local-arm of London-listed Afren, two sources involved in the deals said.
Afren declined to comment and SAPETRO did not respond to a request for comment.
Since 2010 Nigeria has had a policy of encouraging more direct ownership of its oil and gas by Nigerians, either through the state oil company or local private firms. That has raised concerns among foreign oil majors they may lose smaller assets if they do not sell now, industry experts say.
Worries over oil theft, fraught relations with communities living around oil fields and uncertainty over a stalled bill to overhaul fiscal terms has also encouraged majors to sell down.
Many Nigerian firms are backed by powerful political or business figures. The chairman of SAPETRO is General T.Y. Danjuma, a former minister of defence and chief of army staff.
SEPLAT, which is partly owned by French oil explorer Maurel & Prom and Swiss-based commodity trader Mercuria, is expected to submit a bid, the sources said. SEPLAT did not respond to request for comment.
Indigenous Nigerian companies who already manage marginal fields in the delta, including Brittania-U, Vertex, Sogenal and Seven Energy have shown interest in the blocks, they said.
Chevron owns a 40 percent stake in 13 onshore blocks with Nigeria’s state oil firm NNPC and also has deep offshore assets. Its 2012 net daily production in Nigeria averaged 238,000 barrels of crude oil and 165 million cubic feet of natural gas.
Nigeria’s NNPC, which owns the remaining 60 percent of the blocks Chevron is selling, has warned prospective buyers that although the U.S. firm currently operates production of the blocks, it has the right to hand over the handling of drilling to its subsidiary NPDC.
Not having operatorship poses significant risks for would be investors in the fields, not least that NPDC is short on finance and expertise. It has usually had to call in a third-party to operate the blocks, pushing up costs.
Africa’s biggest oil producer usually pumps 2 million to 2.5 million barrels per day of oil, most of which is exported.
Despite the sales of smaller onshore assets, oil majors like Shell, Exxon Mobil and Chevron remain keen on expanding offshore Nigeria and want to keep hold of the biggest fields onshore, major pipelines and export terminals.
– REUTERS
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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