FG to Hold Oil Licensing Round in Mid-2020

NNPC: IOCs expected amendment of PSC Act

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has restated that the federal government would launch a new oil licensing round in mid-2020 for both offshore and onshore blocks in a bid to hit its 3 million barrels per day output target by 2023.

The NNPC boss also said the amendment of the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Act was expected by the oil and gas industry.

Mele Kyari said the bidding round will be launched after the government concludes talkswith foreign oil companies on new fiscal terms for oil exploration following recent amendments to the law.

Reacting yesterday to the reservations and criticisms trailing the just-amended PSC Act, the NNPC boss called for commercial conversation between investors in the nation’s oil and gas industry and the government in order to address perceived lapses in the fiscal terms for the development of the sector.

He added that Nigeria needs the help of international oil companies to raise exploration activities in the country if it is to meet targets to raise production to 3 million b/d by 2023.

He said the level of anxiety or worries that the passage of the PSC Act amendment had generated were unnecessary, adding that there are rooms for conversation between the government and the investors.

Mele Kyari stated these yesterday in Lagos at the opening ceremony of the 2019 Conference and Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE), with the theme: “Expanding Nigeria’s Petroleum Landscape: Digitalisation, Innovation and Emerging New Technologies.’’

He added that such a conversation was necessary to ensure that all parties come together to produce a clear fiscal term beneficial to all, guarantee increased investment in the oil and gas industry as well as boost exploration activities.

According to him, lack of clarity of fiscal terrain worries the industry, and therefore requires planning and joining the government to make sure that the overall petroleum legislation is harmonised.

Kyari stressed that “despite the amendments, there is room for negotiations and we hope to conclude these negotiations by mid next year.”

The Deputy Managing Director of Total E&P Nigeria Limited, Ahmadu-Kida Musa, also added that “There is no doubt that Nigeria has huge barrels of oil assets yet untapped, the government only needed to create the right investment climate for operators,”

Kyari said: ‘’Of course, I am sure people will expect me to comment on the Deep Offshore Act. In the Deep Offshore Act; you must see NNPC in two perspectives. One, as a company completely owned by government as a national oil company, and then, the second part of it, we are also clear in this terrain.

‘’We may all be aware, the Deep Offshore amendment Act is not unexpected. As a matter of fact, it is a requirement of the law that there should be an amendment to the Deep Offshore Act. We can have issues around what kind of amendment can we do? How far can it go? And what kind of amendment can we put on the table? But in reality, it expired in 2003. The conditions that are required to make changes to the Deep Offshore Act were met even by 2003, but we didn’t do anything, we can’t blame anyone, it is an opportunity lost, I see that clearly.

‘’But the reality is that this industry expects something will happen. And that something is very needful and useful for the industry, because we all worry about the clarity of fiscal terrain in our industry but we can plan. And what we can do as an industry is to join the government to make sure that the overall petroleum legislation be put on the table so that when this clarity is brought in our industry, we now know the basis of our investment, how we can cover our costs, and what matters much more, so that people can go back to real work.

‘’But I also know that despite the Deep Offshore Amendment Act, this is a business, there is room for commercial conversation. I do not believe the level of anxiety or worries that the passage of the Deep Offshore Act amendment has caused. I believe it is unnecessary because there are rooms for conversation. There are rooms for engagement so that this business can continue, and I call on our partners to believe this, let us talk to ourselves.”