Nigeria expects 250,000bpd from new oil block winners within five years

Africa’s biggest oil-producing country has said it’s expecting companies that won oil blocks in its latest licensing rounds to add at least 250,000 barrels a day of production within five years.

Oritsemeyiwa Eyesan, chief executive officer of the Nigerian Upstream Petroleum Regulatory Commission, said the output would come from about 22 awards issued across the 2022/2023 Mini Bid Round and the 2024 Licensing Round. She said some of the winners should reach first oil within three years.

“For this set of awardees, we are expecting nothing less than 250,000bpd in the next five years at least,” Eyesan said at an industry event in Nigeria’s commercial capital on Tuesday.

The target is part of Nigeria’s push to raise output toward 3 million barrels a day by 2030, a goal Eyesan said the regulator considers achievable.

“We are certain 3 million barrels by 2030 is a reality,” she said. “It is by doing what we are doing now that we are sure that we will get there.”

Eyesan said the regulator’s priority is no longer only the size of future volumes but whether winners take up their licenses and develop them.

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Each awardee has committed to a minimum work program covering exploration, she said, and the workshop is meant to keep them on track.

“What we should be concerned about now is not just the volumes,” she said. “The volumes will come, I can assure you. It is that we have awardees who take up the licenses and work them.”

The regulator will help companies at least meet their minimum commitments, Eyesan said, and will work with operators, the oil service industry and other government agencies toward the same goals.

The comments came as the commission faced questions about the credentials of some winners. Critics have said that some of the awardees lack a track record in oil and gas and that some are newly registered companies.

Eyesan rejected the concern, saying the bidding guidelines were clear about the kind of company that could take part.

“Bidders had to show technical and financial competence to work the assets, and the commission followed due process in assessing those qualifications,” she said.

“Any company that was awarded the block had posited that they were technically competent and commercially competent to work the assets,” Eyesan said.

She added that the regulator now has a responsibility to make sure the companies are properly resourced, which is one reason for the workshop.

Asked how many awardees had paid their signature bonuses, Eyesan said every winner had 90 days to pay, and that a block would go to the reserve bidder if payment was not made. Anyone holding a license has therefore met all the conditions of the award, including the bonus, she said.

“The question will not arise, because anyone who has a license in his hand has evidenced that they have met all the conditions,” she said.

Eyesan said the 22 licensees represent the final count across the 2022/2023 and 2024 rounds.

Eyesan described the NUPRC as “the foremost regulator in Africa” and said its role is to give awardees certainty. She said the commission wants its guidelines to be clear, consistent across the industry and friendly to business.

If companies run into bottlenecks, the regulator is prepared to revisit its rules, she said. “We are not shy to come back to the drawing board to see how we can unplug those bottlenecks,” Eyesan said.

Nigeria, Africa’s largest crude producer in recent years, has been trying to bring in new investment to the upstream sector and lift output.

The licensing rounds are central to that effort, and the NUPRC is relying on the new licensees to turn awards into drilling and, eventually, production.