NIGERIA LICENSING ROUND
Nigeria licensing round refers to the process by which the Nigerian government offers oil blocks to companies for exploration and production. The purpose of the licensing round is to attract investment and boost the country’s oil and gas industry. The licensing round serves as an opportunity for companies to acquire licenses for specific areas known as oil blocks, where they can carry out exploration and production activities.
In Nigeria, the petroleum sector is divided into three main sectors: upstream, midstream and downstream. The upstream sector involves exploration, drilling and production of crude oil and natural gas. The midstream sector focuses on transportation, storage and processing of petroleum products, while the downstream sector involves refining crude oil into various petroleum products as well as distribution and marketing of these products to consumers.
On the 7th of May 2024, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) through its Chief Executive announced the commencement of the 2024 Licensing Round at the just concluded Offshore Technology Conference in Houston, Texas.[i] This body has the statutory responsibility of ensuring compliance to petroleum laws, regulations and guidelines in the upstream sector. The body is also responsible for the supervision of all Upstream Petroleum operations carried out under licences and leases in the country.
THE 2024 LICENSING ROUND
The Petroleum Industry Act (PIA) in section 7(t)[ii] empowers the NUPRC to conduct bid rounds for the award of Petroleum Prospecting Licences and Petroleum Mining Licences for optimization and exploration. The 2024 Licensing Round introduces twelve selected oil blocks across geographical spectra from the fertile onshore basins and seven deep onshore blocks from the 2022 mini-bid exercise. The blocks are PPL 300-CS, PPL 301-CS, PPL 3008, PPL 3009, PPL 2001, PPL 2002, PML 51, PPL 267, PPL 268, PPL 269, PPL 270 and PPL 271. They are designated areas of land that have the potential for oil and gas reserves.
Companies that are interested in participating in the licensing round are to submit their bids and proposals to the NUPRC. The Commission’s Chief Executive also announced that the Licensing Round is expected to last for about nine months and it will be in line with the principles of the Extractive Industry Transparency Initiative (EITI) and in accordance with section 73(1) of the PIA which is reiterated in the Regulation 5 of the Petroleum Licensing Round Regulations 2022 which states that licenses and leases will be based on a fair, transparent and competitive bidding process and it will be in compliance with the PIA, the PLR Regulations and the Licensing round Guidelines issued by the NUPRC.
AIMS AND OBJECTIVES OF THE LICENSING ROUND
1. Bolster national reserves and stimulate economic vitality
2. The licensing round will reinforce Nigeria’s commitment to openness and transparency.
3. It is a big step towards expanding gas utilization and end-to-end development across the value chain, strengthening energy security and economy.
4. It provides an opportunity to gainfully engage the pool of competent companies in the oil and gas sector with an effect to provide employment opportunities and attract both foreign and indigenous investors.
5. The licensing round will generate revenue for the government through signature bonuses, royalties, taxes. These funds can be utilized for infrastructure development, social welfare programmes and other national priorities.
6. The licensing round aims to facilitate technology transfer from international companies to local firms. This will enhance the capabilities of Nigerian companies and promote indigenous participation in the oil and gas industry.
CONCLUSION
In conclusion, the Nigerian 2024 oil blocks licensing round holds immense potential for the country’s oil and gas sector. With its aims to attract local and international investments, create job opportunities, promote exploration and facilitate technology transfer, this licensing round is a significant step towards sustainable development. Nigeria can harness its oil and gas resources while ensuring long-term benefits for Nigerians and the environment. However, it is important to prioritize transparency, accountability and free and fair bidding in the 2024 bidding round.
[ii] 2021