The Federal Governmnet yesterday said Shell’s oil lease, along with other oil companies whose licences have expired, would be renewed by the end of March. Just as the final investment decision on ‘ Train 7’ of the Nigeria Liquefied Natural Gas Limited (NLNG) is to be signed by the first quarter of 2013.
Also, following repeated complaints by investors over the unduly long contract cycles, the Nigerian National Petroleum Corporation (NNPC) has revealed its commitment to reducing the contracting cycle to 45 days.
These disclosures were made yesterday, following the signing ceremony for the 20 year renewal of shallow offshore Oil Mining Leases, 67, 68 and 70 for the NNPC – Mobil Producing Nigeria Joint Venture (JV) where minister of petroleum resources, Diezani Allison-Madueke noted that with the closure on the renewal for the Mobil leases, other pending renewals would be expeditiously processed.
Madueke said: “I think the most pressing outstanding renewals right now would be the Shell ones and yes, Chevron as well. But I am assured by the director of the Department of Petroleum Resources, because we’ve had this discussion within the last 24 hours, that before the end of next month, the Shell renewals will be signed. We are still looking at the Chevron ones but we are assured that the Shell ones would be signed by next month.
“We are cognisant of the criticality of holding statutory rights to oil and gas assets, in particular the implications on investment decisions and on major projects delivery. Positive milestones such as these are the ingredients that encourage all stakeholders to carry-on, even when the journey appears challenging. I therefore think it safe to reiterate that as long as all stakeholders are joined in common purpose and maintain a common resolve, the journey moves forward and our collective future would be assured.”
She urged the Exxon-Mobil group to maximise the inherent opportunities by strategically committing to redevelopment commitments on investments, to the increased support of job creation with emphasis on gas- based industries and the continued growth in oil and gas reserves and ultimately to a growth in production.
However, despite the push for increased transparency in the industry, the minister declined stating the exact value of the lease renewal, saying “those are not issues that we would tend to speak about in the open forum.”
According to the NNPC Group Managing Director (GMD), Austin Oniwon, the industry will also need about $100 billion in the next five years, for it to meet up its exploration and production activities, adding that the future of the Nigerian oil and gas industry is very bright going forward, despite the uncertainties that have characterised the global oil and gas industry.
Speaking on the investment in gas, he said the Final Investment Decision (FID) on NLNG Train 7 would be signed in the second quarter of 2013, “the investment decision on Train 7 of the NLNG will take place second quarter of 2013” adding that the future of Nigeria’s oil and gas is dependent on the development of infrastructure.
In 2011, the NNPC claims to have been able to clear all outstanding contracts with the NNPC board approving all the ones beyond the NNPC management. “As at the close of business 2011 we had less than two months of outstanding contracts that we have not been able to pass. So we have made significant progress in this regard. Our target is to ensure that the cycle between when the bids come in and when the approval is given, is within 45 to 60 days maximum, and we are going to stick to that one,” Oniwon said.
Meanwhile, Mark Ward, chairman/managing director ExxonMobil companies Nigeria, describing himself as probably “the happiest man in the room” noted that despite the many challenges, Exxon Mobil has not lost confidence in Nigeria moving forward.
“This has been a long journey; some would say a difficult journey to accomplish the objective we have delivered today. Within any relationship, there would be ups and downs, there would be discussions but through discussions and dedication, there is always a way to work through the challenges you see in front of you, particularly if both sides recognise that there is a bigger price at the end of the day. For us with the joint venture, the price is to continue to develop the resources we are blessed with in these leases, they are significant.
“We’ve got a very aggressive programme that with our senior partner, with NAPIMS, we would continue to implement aggressively. We’ve got a focus on gas resources which are becoming critically important to the nation and we are confident that with our integrated approach to gas supply for power and incremental gas volumes for the domestic market, that we will further add to the successes of the Joint Venture,” he enthused.
Ward observed that one of the most difficult challenges has been the funding, noting that so far, the Group has come up with very innovative solutions which comply with national content directives but also finds a way to continue the significant development of the JV resources without burdening the federal coffers.
Notably, the country chair for Shell companies in Nigeria and managing director SPDC Mutiu Summonu ,speaking at the ongoing Nigerian Oil and Gas conference and Exhibition, said he was optimistic Shell would be the next one in line saying, “The earlier these licenses are renewed, the better for us.” Guy Maurice, managing director of Total E&P Nigeria limited, meanwhile adds, “People are not asking for gold plated contacts, what they want is stability.”
