Eric Watkins
Senior Correspondent
LOS ANGELES, Mar. 14 -- Nigeria has announced plans to seek investment in oil and gas exploration and development as concerns grow over attacks near its offshore production facilities.
The Nigerian government will begin seeking bids Mar. 22 for new onshore and offshore licenses.
Companies will be able to bid for the rights to 63 exploration blocks, said Edmund Daukoru, oil advisor to Nigerian President Olusegun Obasanjo.
Twelve of those blocks are in deep water, 12 in the Niger Delta, and the rest onshore in Anambra, the Benue River Valley, and the area around Lake Chad in northeast Nigeria.
"These inland basins have become all the more important as the world moves into a scenario in which gas plays a fast-increasing role in the energy mix," Daukoru told a public briefing on the license offering.
International oil and gas companies operating in Nigeria in recent years have concentrated on offshore prospects.
To encourage onshore work, Nigeria also plans to introduce a production charge on offshore production contracts.
The government has additional plans to reduce the size of the blocks on offer to 1,250 sq km from 2,500 sq km and to modify the terms of production-sharing contracts, which have become controversial. Most of Nigeria's production comes from joint ventures between international companies and Nigeria National Petroleum Corp.
Under terms of existing PSCs, international firms are allowed to recover the cost of exploration and initial drilling before they share income with the state.
Now, an 80% ceiling will apply to cost-recovery income, allowing the government to receive revenues from new fields immediately.
The announcement of those plans came as the Nigerian government acknowledged losses in oil revenues in the billions of dollars to sea piracy and other violence in the Niger Delta region (OGJ Online, Feb. 9, 2005).
"In the recent past, Nigeria has recorded over $2 billion [in] loss[es] in the oil sector as a result of illegal activities, especially in the Niger Delta region," Obasanjo told a conference in Abuja.
He said the Nigerian navy is "intensifying its policing efforts to combat this act of economic sabotage."
Obasanjo's remarks came at a week-long seminar on energy security and the implications of a new African oil boom in the troubled Gulf of Guinea region, which was sponsored by the US Department of Defense.
At the seminar, African naval commanders urged the countries that will come to depend on African oil to fund a rapid expansion in local navies to protect the region, but western delegates warned that more must be done to combat an oil-fueled looting spree.
So far, Nigeria's policing of the Niger Delta is minimal as the country only recently received four World War II-era patrol boats—its entire sea-going fleet—from the US Coast Guard.
Nigeria also has just begun to buy eight 25-ft Defender-class fast response boats from a private US supplier.
