The federal government will offer marginal oil fields for auction this year despite the crash in crude oil prices, Mele Kyari, the group managing director of the Nigerian National Petroleum Corporation, has said.
The country has not conducted any licensing round since 2007, while a marginal fields round was last held in 2003.
Kyari said the government would not be able to conduct any major licensing round as the current market realities would dampen foreign investors’ appetite.
He spoke on Tuesday during a virtual dialogue session on government fiscal policy decisions in response to the current challenges organised by the Ministry of Finance and the UK Department for International Development Partnership to Engage, Reform and Learn.
He said, “Marginal fields by their very nature, require very small-scale investment. Countries normally do this (licensing round) to encourage local participation and this local participation are usually funded by local borrowings because the scale of investment is not huge.
“So, you can typically do a marginal fields bid round even when oil prices are low because their costs of production are usually lower; they don’t need huge capital outlay. It is possible to do a marginal fields bid round this period.”
Kyari ruled out the possibility of conducting “a substantive, full-scale licensing round, where you require foreign investments”.
He said, “This is not the best time to call foreign investors to participate in any bid round. The licences will be priced very low, and even the appetite will be very low”
