Price Crash Delays Oil Bid Rounds, Upstream Projects
Nigeria will not hold bidding rounds for major oilfields until crude prices recover, and some upstream projects will be completed much later than originally planned, officials said in a web conference yesterday.
Oil prices also rose yesterday as traders looked optimistically at moves by several major economies to ease coronavirus lockdowns, allowing greater economic activity and likely boosting demand for oil.
International benchmark grade, Brent crude maintained upside swing in the past few days getting close to $30 per barrel.
The price rose 4.4 per cent to $29.21 per barrel, according to Markets Insider data, while West Texas Intermediate rose close to seven per cent to $22.64 per barrel.
Nigeria, Africa’s largest oil producer, is grappling with a significant drop in oil prices and a collapse in global fuel demand caused by lockdown measures aimed at containing the new coronavirus.
The delay in some licensing rounds cut the country’s projected revenue from signature bonuses to N350 billion ($972.22 million) this year, from N939 billion originally expected, the officials said on the call, with most the anticipated revenue coming from licence renewals.
The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mele Kyari, speaking on the licensing rounds, said: “”Where you require foreign investment … this is not a good time; the appetite would be very very low”.
The Federal Government is, however, accelerating bidding rounds for so-called “marginal” fields, which Kyari said were less impacted by low oil prices because they would likely be taken up by local producers and would require less capital to develop.
Finance Minister Zainab Ahmed said some upstream oil and gas projects would be delivered “much later than originally planned” due to scaled back government investments.
She added that the country was having trouble selling some of its oil cargoes, and noted it would also have to cut production to below what it originally expected in the budget. The country, as part of an agreement with the Organisation of Petroleum Exporting Countries (OPEC) and other producing nations, agreed to trim output to help balance the global market.