Nigerian October Oil Licensing Round Targets 50 Blocks

Dow Jones Newswires

STAVANGER Aug 21, 2006 (Dow Jones Newswires)

Nigeria, Africa's biggest oil producer, plans to offer 50 oil blocks to companies in its next licensing round, expected to be held in October, a top Nigerian oil official said Monday.

"We're targeting 50 blocks. There will be 30 in the (Niger) Delta and offshore area, and 20 others in inland areas," Tony Chukwueke, Nigeria's head of the Department of Petroleum Resources, told Dow Jones on the sidelines of an energy conference.

Chukwueke said 8 of the blocks are in the deep offshore area, where much of Nigeria's new oil production is expected to come from over the next decade.

The licensing round will put an emphasis on getting some oil blocks to the six oil producing states in the country's volatile and impoverished Niger Delta, where most of Nigeria's oil is currently produced.

"They'll (the states) get special attention...but we're not going to give blocks away for the sake of it. The states will have to identify good partners to get the blocks," he said.

The emphasis on the states is aimed at placating criticisms of the federal government by many Delta leaders and citizens, that they don't benefit enough from the country's oil and natural gas wealth. In Nigeria's most recent oil licensing round, two blocks were awarded to companies from the Niger Delta.

The department, which oversees Nigeria's oil exploration activities, will hold investor meetings in London and Abuja, Nigeria's capital, around late September. Companies will place bids in October and winning bids are expected to be announced in November, Chukwueke said.

As in Nigeria's most recent licensing round, companies placing bids will have to commit to undertaking downstream projects, such as fertilizer and refinery projects, in addition to exploring for and producing oil and gas, he said.

Companies will have to put up a non-refundable deposit of 25% of the value of their total bid. "This is new from other rounds we've had. We want to attract only companies that are serious about bidding," Chukwueke said.

The results of Nigeria's most recent oil licensing round will be announced by the end of August or early September, Chukwueke said. In that announcement, 17 oil blocks will be awarded to 11 consortia, including at least one from China.

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