Twenty-Four Oil Cos Meet Nigeria Oil Block Bond Deadline

LAGOS, Oct 17, 2005 (Dow Jones Commodities News via Comtex)

Twenty-four of the 44 oil companies that won blocks in Nigeria's latest oil licensing round met Friday's deadline to provide performance bonds guaranteeing they have financial backing, a spokeswoman for the Department of Petroleum Resources said Monday.

The bond is a commitment by banks or other financial institutions to back an oil company in funding the blocks' development. The submission of the bonds is the second stage of the licensing process. Those firms which meet the performance bond deadline are expected to pay their signature bonuses within 60 days.

The spokeswoman said ten other companies have requested an extension to be considered for the bonds. She said Nigeria's junior Oil Minister, Edmund Daukoru, is now considering the requests. A spokesman for Daukoru said decision is expected Monday.

The DPR is responsible for the execution of the licensing round, under the supervision of the ministry.

Winners of the oil blocks risked losing their awards if they didn't submit the bonds by Friday.

Nigeria offered 74 oil blocks during the licensing round, of which 22 were awarded. Some of the blocks are tied to downstream and power projects.

Negotiations on production-sharing contracts between the government and winning companies are expected to start by the end of October, while the contracts could be ready for signing by the end of the year.

Copyright (c) 2005 Dow Jones & Company, Inc.


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