NIGERIA Invest in 2012-13 - Newsdesk Media

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oil, gas and minerals
Workers on a Nigerian oil rig contribute to the national
output of around 2.2 million barrels of oil each day
UK-listed resources company Petrofac also thought
that it was worth the risk, later buying a stake in Seven.
Ayman Asfari, group chief executive of Petrofac, said:
“Nigeria is a high-growth market, where we have been
seeking commercial opportunities for some years. Seven
Energy combines a very attractive market position with
considerable development upside.”
The joint ventures are very different from those seen in
the past, when blocks were often awarded to friends of the
incumbent government with little or no industry experience.
Nowadays, the domestic firms usually have very strong
credentials in their own right.
A mini-licensing round held last year, in which Shell
Petroleum Development Company (SPDC) tried to divest
its interest in four blocks, attracted a host of bidders, with
several Nigerian firms going it alone. These included Vertex,
a company made up of around a dozen former officials from
NNPC, backed purely by African banks.
Prices in the bidding rose higher and higher, with
several experienced companies withdrawing as they
believed the competition had become too stiff. The bidding
then hit a stumbling block as NNPC decided that it wanted
to use a clause in the original joint-venture agreement
with SPDC, allowing it to take over day-to-day operatorship
of the blocks in the event of a sale.
invest in nigeria 2012-13
This caused some other experienced Nigerian companies
to balk. Historically, NNPC has found it almost impossible to
fund its share of joint ventures in any timely fashion, and the
best Nigerian engineering staff are often attracted to work for
foreign companies, leaving NNPC’s exploration and production
section with a poor reputation.
Some deals did go ahead, including the sale of
OML 26 to First Hydrocarbon Nigeria, a joint venture
between UK-listed oil company Afren and a number of
Nigerian investors. The firm paid $148 million for the block,
which it believes has gross recoverable and contingent
resources of 320 million barrels of crude oil (bbl) and another
615 million barrels of oil equivalent (boe) of unrisked
prospective resources.
If Nigeria remains committed to operating onshore
acreage sold off by the majors this will remain a serious
stumbling block, with a significant percentage of companies
unwilling to risk this partnership.
These deals pale into insignificance compared to an
offer made back in 2009 by Chinese state-controlled oil
giant CNOOC, which was scouring the continent for supplies
to meet its growing energy demands. In meetings held with
the office of then president Umaru Yar’Adua, it offered
to buy a 49 per cent stake of 23 mostly onshore blocks
for more than $30 billion.