Nigeria to Open Bidding for Deep Offshore Oil Blocks

By William Clowes (Bloomberg) –Nigeria plans to auction deep offshore oil and gas licenses for the first time in 15 years, according to a senior government official.

The West African country will launch a bidding round for seven deep-water blocks in November, the chief executive of the Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, said by phone. The government issued dozens of such permits between 1993 and 2007 to open up the ocean floor to oil and gas production.

The blocks available are at depths of between about 1,200 meters (3,936 feet) and 3,100 meters, according to Komolafe. They are located off the city of Lagos in southwestern Nigeria rather than off the coast of the Niger Delta further to the east where most of the country’s oil industry is concentrated, he said.

Nigeria’s oil output fell to a multi-decade low of less than 1.2 million barrels a day in September and has almost halved since the first quarter of 2020. The government blames rampant crude theft on the pipelines that crisscross the Niger Delta for shutting down wells and killing off investment.

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In recent years, deep-water production led by international companies such as Shell Plc and TotalEnergies SE has accounted for about 35% of oil output but its share has risen this year as onshore operators have struggled. In addition to granting new licenses, the government is encouraging current block-holders to develop more of their offshore acreage.

Earlier this month, the NUPRC also resumed a separate bidding round for firms interested in commercializing gas that is burned off – or “flared” – by oil producers. While Nigeria possesses Africa’s largest proven gas reserves, most of it is untapped, flared or re-injected into oil wells.

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© 2022 Bloomberg L.P.

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