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Nigerian Oil and Gas Industry Update - Q2 & Q3 2020

Nigerian Oil and Gas Industry Update - Q2 & Q3 2020

2020 has been unprecedented in the scale and magnitude of economic turbulence both globally and locally. While the start of the year brought high expectations for the oil and gas sector in Nigeria, the COVID-19 pandemic has had a domino effect on the developments in this sector and has created a need to scale down initial projections.

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Wale Ajayi

Partner, Tax, Regulatory and People Services

KPMG in Nigeria

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This was clearly demonstrated in the recently released 2021 Proposed Budget, which was aptly themed a “Budget of Economic Recovery and Resilience” and is expected to accelerate the pace of Nigeria’s economic recovery against the backdrop of the global economic crisis and domestic impact of the COVID -19 pandemic.

In this edition of the Nigerian Oil and Gas Industry Update, we have highlighted the significant developments in this sector within the period and how they are shaping the industry as well as the continued impact of the COVID-19 pandemic on the relevant stakeholders in the oil and gas sector.

1. Nigeria’s Marginal Oilfields Bidding Round

On 1 June 2020, the Department of Petroleum Resources (DPR or “the Agency”) announced the commencement of the marginal fields bid round for 2020. This bid round is the first in nearly 20 years1 and has on offer, 57 fields located on land, swamp and shallow offshore terrains. The bid was opened to indigenous companies and investors interested in participating in petroleum exploration and production business in Nigeria. According to the DPR guidelines on the 2020 oil bid round exercise, interested bidders were expected to pay a total of $115,000 and N5 million in statutory and other application-related fees.

In managing the bid exercise, the DPR developed a transparent process flow for this process. According to the Agency’s published guideline on the award process i.e. the Guidelines for the Award and Operations of Marginal Fields in Nigeria, the bid round involves nine (9) key steps. They are: (1) Formal announcement for commencement of the exercise (2) Launch of marginal fields bid portals / issuance of specific requirements (3) Expression of Interest (EoI) registration (4) Prequalification of interested companies (5) Announcement of pre-qualified companies (6) Data prying, leasing and purchase of reports (7) Submission of technical and commercial bids by prequalified companies (8) Evaluation of technical and commercial bids (9) Announcement of winning bids2.

As of the time of publishing this newsletter, stages 1 to 6 appear to have been completed. Industry watchers are currently awaiting the DPR’s announcement on the winners.

Click here to read more on this Newsletter.

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