New Fast-Paced Bidding Round
Earlier this week, Nigeria offered 45 oil blocks up for bid, which is 15 less than the postponed Q4 2006 sale had promised.
According to several AP reports, Energy Minister Edmund Daukoru said the offer process would be completed before the new government takes office on May 29. Elections are scheduled for April 14 and 21. Daukoru also announced that block winners will have to pay half of the signature bonus at the bid conference on May 3. The remaining balance is to be paid before a production-sharing contract is signed.
Of the 45 blocks on offer, only 10 are in deepwater. Eleven blocks are located in inland basins and the remaining are onshore and on the continental shelf.
Some critics have questioned if the concise bidding period coupled with unrest throughout the country and the lack of security for foreigners will even allow for a credible award.
His call to withdraw from Nigeria is fueled by the most recent report of a kidnapping. This time it was a Scottish oil worker. On Saturday, March 31, Gordon Grey was kidnapped by Nigerian rebels as he worked on the Bulford Dolphin drilling rig on OML 122. Thankfully, Equator Exploration, the operator of OML 122, announced that he had been released from captivity in good health on April 4.
Though most foreigners are released unharmed after a cash payment, the number of kidnappings is rising. According to AP reports, since January nearly 70 foreign oil workers have been taken, which is approximately the total kidnappings in all of 2006.
Scotland is not the only country affected by kidnappings. Nigerian militants continue to hold one Dutch construction worker and two Chinese workers in captivity.
Offshore Rig Managers
However, Nigeria's security issues affect every country represented by those 11 drilling contractors whose workers hail from nearly every corner of the globe. While Amicus' call for improved safety measures in Nigeria may be the first of its kind, it may not be last. As such, rig managers from around the world may find it increasingly difficult to attract qualified workers to continue exploration and development work on Nigeria's 31 offshore rigs if security doesn't improve soon.
As of April 4, 2007
Shell is the largest oil producer in Nigeria, accounting for more than 900,000 b/d of Nigeria's 2.4 MMb/d. The Dutch-Anglo giant is also the largest operator of offshore rigs in Nigeria. As can be seen below, Equator Exploration, whose worker was kidnapped last week, is the only other UK-based operator with rigs working offshore Nigeria.
As of April 4, 2007
Nigeria is already seeing oil production fall off due to the disruption caused by kidnappings, sabotage, and social unrest. Officials have said that Nigeria lost $4.4 billion last year as a result of reduced output.
Considering that operators have only a month to place a bid, the state of security in the Niger Delta, and the upcoming change of government, this bidding round may not draw the majors and large independents Nigeria is accustomed to attracting. At the same time, this could represent an opportunity for operators to secure acreage in Nigeria at cheaper prices than might otherwise be possible.
For More Information on the Offshore Rig Fleet:
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