Nigeria oil licence auction attracts huge interest as brent crude near $86 a barrel

Chief Executive Officer Nigeria Upstream Regulatory Commission, Gbenga Komolafe has said that Nigeria is expanding the number of oil blocks slated for auction in its 2024 licensing round as well as extending the deadline for ending the exercise amid keen interest in the offer just as Brent crude futures were up 78 cents, or 0.9%, to $85.85 a barrel, having earlier hit $85.89, a high not seen since 1 May. U.S. West Texas Intermediate futures for July, which expire on Thursday, gained 70 cents, or 0.9%, to $82.27. There was no WTI settlement on Wednesday because of a U.S. public holiday, which kept trading largely subdued. The more active August contract was up 60 cents at $81.31.

Nigeria opened a licensing round in April offering a total of 19 onshore and deepwater oil blocks to investors. This has now been expanded to include an additional 17 deep offshore blocks to the 2024 licensing round. “We have undertaken more exploratory activities and as a result acquired more data to expand the offer and extend the deadline. This has given rise to tremendous interest from investors,” Gbenga Komolafe, head of Nigerian Upstream Regulatory Commission (NUPRC) said. Komolafe said that registration, which had been slated to close on June 25, has been extended by 10 days. Bid submissions would open on July 8 and close on Nov. 29. The oil regulator is seeking to deepen exploitation of the country’s estimated 37.5 billion barrels of crude oil and 209.26 trillion cubic feet of natural gas reserves. 

It has tried to sweeten the offer by cutting entry fees called signature bonus from around $200 million per field to $10 million, promised a fair and transparent process and allowed online submissions through its website. Bidders also have the option to lease single units of oil blocks or in clusters. Nigeria is seeking to halt the flow of investments to African rivals Angola and Namibia by improving the ease of acquiring oil blocks. Nigeria, a member of the Organisation of the Petroleum Exporting Countries (OPEC), has seen its oil production decline from around 2 million barrels a decade ago to just over 1.4 million barrels per day. Oil majors are leaving onshore fields – prone to sabotage and frequent claims to compensation for spills – to focus on deepwater fields where disruptions are less common.