TotalEnergies, MRS, Sifax, FIRST E&P, Sahara, Others Win Oil Blocs as Dangote Crashes Petrol Price Undermining Imports

•FG approves Shell’s $2.4bn oil, gas assets sale to Renaissance, says consortium

Emmanuel Addeh in Abuja and Peter Uzoho in Lagos

In Nigeria’s first oil bid round conducted under the Petroleum Industry Act (PIA) 2021, many indigenous oil and gas companies yesterday emerged winners of onshore and deep offshore oil blocks otherwise known as Petroleum Prospecting Licences to begin exploration, development and production activities on the assets. 

Just as it emerged yesterday that Dangote Refinery had crashed petrol prices to N899.5 (cash payment) for two million litres and a matching two million litres on a bank guarantee (BG) valid for 15 days (Access, Zenith & First Bank), and N895 (cash payment) for 10 million litres and a matching 10 million litres on a BG valid for 15 days (Access, Zenith & First Bank), from the N970 per litre announced by the company last month.

Also, yesterday, the Renaissance Consortium announced in a statement that the federal government had finally approved Shell’s $2.4 billion onshore and shallow-water assets sale to Renaissance Group, the consortium of five firms that had purchased the asset.

Recall that on January 16 this year, Shell had announced that it had reached an agreement to sell its Nigerian onshore subsidiary, the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium of five companies, comprising four exploration and production companies based in Nigeria and an international energy group.

At the commercial bid conference for the 2022/2023 Mini Bid Round and the 2024 Licensing Round held in Lagos yesterday, Nigerian companies including Sifax, MRS, Applefield, FIRST E&P, Sahara Deepwater, among others, emerged winners of oil blocks in the 31 PPLs put on offer by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in 2022 and 2024.

Of 31 blocks initially put on offer by the NUPRC – seven in the 2022/23 Mini Bid Round and 24 offered in the 2024 Licensing Round, bidders only showed interested in 25 blocks while six assets failed to attract any bid.

Curiously, the Nigerian National Petroleum Company Limited (NNPC) failed to win any block despite appearing as qualified bidder in some blocks as it lost to MRS and others competitors.

At the occasion, NUPRC announced that it would be conducting another bid round in 2025 after the completion of the current exercise, adding that it had begun the implementation of the Drill or Drop provision in the PIA to ensure that idle blocks are taken away from the holders and put back into the basket for auctioning.

However, according to the results of the bid exercise announced real-time at the conference, Sifax & Royalgate Consortium won two deep offshore blocks -PPL 300-DO and PPL 304-DO. 

Ocean Gate Engineering Oil and Gas Limited won two deep offshore assets -PPL 302-DO and PPL 3007.

Panout Oil and Gas Limited won one cluster block PPL 300/301CS and PPL 3015. TotalEnergies Exploration and Production Nigeria Limited won PPL 2000/2001; and MRS won PPL 303-DO.

Also, Hakilat Oil and Gas Consortium won PPL 305-DO and PPL 3016. Biswal Oil and Gas Limited won PPL 306-DO and PPL 2002; while Sahara DeepwaterResource Limited emerged winners of two blocks -PPL 270 and PPL 271.

Other winners were: First Exploration and Petroleum Development Company Limited – PPL 2003 and PPL 2006; Dewayles International Limited -PPL 2004 and Broron Energy Limited – PPL 2009.

Also, Applefield Oil and Gas Limited won two assets – PPL 2005 and PPL 3017; R28 Holdings Limited won PPL 2007 and PPL 3011 while Petroli Energy Marketing and Supply Limited won PPL 269.

Similarly, Tulcan Energy Exploration and Production Company Limited won two assets -PPL 2008 and PPL 3012.

Presenting the summary of the result of the bid exercise, Chief Executive of NUPRC, Mr. Gbenga Komolafe, said the bid round was the most transparent in the history of the Nigerian upstream oil and gas industry.

He noted that the exercise was in compliance with the provisions of Section 73, Subsection 1A of the PIA, which states that bid exercise shall be conducted in the most transparent, fair and competitive atmosphere.

Proceeding with the declaration of the results, Komolafe said: “So the first is PPL 300-DO, it was won by Sifax and Royal Gate Consortium. And for that asset, the company is the only bidder, so there’s no reserve bidder. So, in effect, Sifax won that block. 

“Also, we have PPL 302-DO, it was bidded and won by Ocean Gate Engineering Oil and Gas Limited. And also, there’s no reserve bidder in that respect.

“We have PPL 303-DO, won by MRS Oil and Gas Company Limited. The NNPC Limited is a reserve bidder in that exercise.

“For PPL 304-DO, Sifax & Royal Gate Consortium won that block. But there’s a reserve bidder by Homeland Integrated Offshore Services Limited.

“For PPL 305-DO, Hakilat Oil and Gas Consortium Limited won the block. NNPC E&P Limited is a reserve bidder.

“For PPL 306-DO, Biswal Oil and Gas Limited won the block. Also, for PPL 269, Petroli Energy Marketing and Supply Limited won the block.

“For PPL 270 and PPL 271, Sahara Deepwater Resources Limited won the two PPLs.

“For PPL 300 and PPL 301CS, I think it’s listed as a cluster. It was won by PanoutOil and Gas Limited.

“For the cluster, we have assets PPL 2000 and PPL 2001. TotalEnergies Exploration and Production Nigeria Limited Nigeria Limited won the cluster, with a reserve bidder in Star DeepWater Petroleum Limited.

“Then, PPL 2002 was won by Biswal Oil and Gas Limited. Of course, there’s no reserve bidder.”

He added, “For PPL 2003, First E and P Development Company Limited. There’s no reserve bidder. For PPL 2004, Dewayles International Limited won the block. PPL 2005 was won by Applefield Oil and Gas Limited.

“PPL 2006 was won by First E & P Development Company Limited. PPL 2007 was won by R28 Holdings Limited…”

Earlier in his opening address, Komolafe revealed that the commission has begun the recovery of Idle oil blocks in Nigeria as it announced a fresh oil licensing round for 2025.

According to him, the 2025 licensing round will focus on underexplored assets, fallow fields, and natural gas development as part of Nigeria’s commitment to the UN Sustainable Development Goals.

Komolafe emphasised that the NUPRC aims to make the licensing rounds an annual event to address challenges such as declining production and rising global competition.

He stated, “While we are proud of our recent achievements as industry stakeholders, we must remain mindful of the challenges ahead. Declining production levels and increased global competition demand strategic action. Fortunately, the Petroleum Industry Act has given us a unique opportunity to transform the industry, attract investment, and position Nigeria as a leader.

“To this end, I am pleased to announce that the NUPRC will launch another licensing round in 2025. Building on the lessons learned from this year’s round, the 2025 exercise will focus on discovered and undeveloped fields, fallow assets, and prioritise natural gas development to support Nigeria’s commitment to the UN Sustainable Development Goals.”

Komolafe further explained that the regulator’s focus has been on restoring investor confidence in the industry, adding that this has been achieved by ensuring that its activities are fully aligned with the provisions of the Petroleum Industry Act.

He said, “What we are doing here today is not a matter of discretion by the commission but is in line with the statutory provisions of the Petroleum Industry Act. The law stipulates that the commission should conduct licensing rounds.

“The law did not make it annual, but to ensure that we grow, preserve, and optimiseour hydrocarbon resources, as I said, we are committed to annual licensing rounds. And that’s why I said that at the conclusion of this (2024) exercise, we will commence another one in 2025.”

The CCE also stated that the commission has begun recovering idle assets based on the ‘drill or drop’ provision of the Petroleum Industry Act.

“There is a provision in the Petroleum Industry Act that speaks to ‘drill or drop’. We have been engaging with the industry to ensure that unexplored areas and resources are returned to production. We intend to revitalise these idle assets, as many of them remain unused, which is not the intent of the Petroleum Industry Act.

“So, as a commission and as a regulator, we have started activating the ‘drill or drop’ provisions of the Petroleum Industry Act, which is intended to ensure that our assets do not remain idle. We are reintegrating them into the pool, and they will be available for bidding by interested parties in the next licensing round,” he added.

Also, in a statement yesterday, the NUPRC boss stressed that the launch of the 2024 licensing round marked a pivotal moment in Nigeria’s energy landscape.

Komolafe noted that the licensing round was not merely a commercial exercise; but a bold declaration that Nigeria was ready for business.

“The 2024 licensing round launched in May, represents a significant leap in Nigeria’s hydrocarbon development strategy. The licensing round offers 24 carefully selected blocks spanning onshore, shallow water, and deep offshore terrains. Complementing these are the seven deep offshore blocks from the 2022 Mini Bid Round, bringing the total to thirty-one (31) blocks.”

According to him, key objectives of the licensing round included “growing our country’s oil and gas reserves through aggressive exploration and development. Boosting production while expanding opportunities for gas utilisation across the value chain.

“Enhancing energy security and economic growth. Attracting investments while creating employment opportunities and enabling technology transfer.

Optimising the value of our petroleum assets and ensuring sustainable development of Nigeria’ untapped potentials.”

Komolafe emphasised commitment to transparency and accountability in managing Nigeria’s oil and gas sector, aligning with global best practices and principles of the Extractive Industry Transparency Initiative (EITI).

The commercial bids were opened through an electronic bidding process supervised by representatives from NEITI, the Federal Ministry of Finance, and the Federal Ministry of Petroleum Resources.

Komolafe highlighted several unique features of the Licensing Round designed to foster an investor-friendly environment, to include, “investor-friendly terms with reduced signature bonuses and the recent Presidential Executive Orders on non-associated gas (NAG) development, optimised local content and the reduction of contracting costs and timelines, we have fostered an enabling environment that strengthens Nigeria’s competitiveness in the global energy market.

“Streamlined Allocation: This round prioritises single applicants or well-established consortia to ensure greater efficiency and accountability, as against the 2020 MFBR 2020 where the allocation of blocks to multiple companies presented certain challenges.

“Collaboration for Local Content Development: This bid round has also been designed to foster collaboration between reputable local companies and their international counterparts, promoting local content development, creating employment opportunities and facilitating technology transfer.

“Sustainability Commitments: Environmental and social considerations remain a top priority, and we will ensure that all exploration and production activities adhere to global best practices while promoting harmonious and peaceful coexistence between oil and gas companies and their host communities.

“Following this conference, successful bidders will receive their blocks within months; payments of Signature Bonuses will be made in full before the granting of licenses or leases; awarded blocks will undergo aggressive exploration and development in line with minimum work programme obligations; capacity building and job creation for Nigerians will be proritised, while delivering optimal value to both our local and foreign investors and government will continue to integrate sustainability measures into all exploration and production activities, safeguarding host communities and protecting the environment.

As Nigeria embraces this transformative opportunity for growth driven by favorable fiscal provisions under the PIA and Presidential Executive Orders,”

Komolafe expressed optimism about early final investment decisions (FIDs), increased exploration activities, and prompt first oil and gas production across all terrains.

The CCE paid glowing tribute to President Bola Ahmed Tinubu for his support for the exercise, the first in showcasing transparency, fairness and competitiveness in line with the provisions of the PIA. He was optimistic that the implementation of the bid will enjoy the incentives in the Presidential Orders and initiatives recently released.

He therefore urged stakeholders to seize this moment to develop Nigeria’s oil and gas resources responsibly and inclusively.

FG Approves Shell’s $2.4bn Oil, Gas Assets Sale to Renaissance Consortium

The federal government’s approval came via a statement by Renaissance Group, the consortium of five firms  yesterday.

It was unclear as of last night why the announcement did not come from either the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) or the defactoMinister of Petroleum Resources, President Bola Tinubu.

But the approval marked the end of Shell’s nearly a century of operations in Nigeria’s onshore oil and gas segment and yet a broader retreat by western energy companies from Nigeria’s onshore and shallow water oil assets, including Exxon Mobil, Italy’s Eni and Norway’s Equinor.

Shell’s sale to Renaissance, comprising five companies, was announced in January but was blocked in October by the industry regulator, citing several reasons.

Specifically on October 17, THISDAY broke the story, quoting sources as saying that Shell’s oil assets’ sale was not in the  ‘Waiting Room’, having been roundly rejected by the federal government.

According to the story run by THISDAY, quoting people with deep knowledge of the goings-on in the oil and gas sector,  a thorough appraisal of the proposal made by the consortium, showed  that the group of companies did not have the requisite qualifications to manage the assets.

However, it noted that the completion of the sale of its 30 per cent onshore assets was subject to approvals by the Federal Government of Nigeria and other conditions.

“This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions” said Shell’s Integrated Gas and Upstream Director, Zoë Yujnovich.

The SPDC JV holds 15 oil mining leases for petroleum operations onshore and three for petroleum operations in shallow water in Nigeria. Renaissance was formed by ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin.

The reserves of the subject of the  transaction were approximately 458 MMboe, while the consideration payable to Shell as part of the transaction was to be circa $1.3 billion.

The buyer, if the deal had succeeded at the time, would have made additional cash payments to Shell of up to $1.1bln, primarily relating to prior receivables and cash balances in the business, with the majority expected to be paid at completion of the transaction.

But THISDAY authoritatively reported that the proposal failed to impress the upstream regulator, which turned down the request by the consortium of five companies.

The key reasons the NUPRC declined to approve of the deal, it was learnt, among others, had to do with the consortium’s seeming lack of verifiable capacity, having not been able to manage even up to 50 per cent of all the current oil and gas assets under its control.

It was further understood that the upstream regulator had serious posers over the financial involvement of Shell even after the proposed sale and purchase agreement, having found that there were issues with transparency in the availability of funds.

Aside from questions over management capacity, the seller’s proposal to finance the project as indicated in its January 16 statement, was also not very clear to the regulator, THISDAY was told.

Also considered were industrial relations and labour issues, as well as data repatriation plans of the parties to the deals. The regulator had also cited Renaissance’s inability to demonstrate its capacity to manage the assets, which hold an estimated 6.73 billion barrels of oil and condensate, and 56.27 trillion cubic feet of gas.

However, yesterday, Renaissance said “this approval marks a significant step forward from the announcement of the sale and purchase agreements in January”. With the approval, the minister of petroleum is now allowing Renaissance Africa Energy’s purchase of SPDC.

But civil-society groups led by Amnesty International (AI) had objected to the deal because of concerns about human-rights violations and asked the authorities not to proceed with it until safeguards were put in place.

However, the deal would fulfill Shell’s long-term goal of exiting onshore operations in the challenging Niger Delta area. The company has received notification of the approval and is assessing it, the firm said in a statement. 

Further recall that in October, Nigeria approved Exxon Mobil Corp.’s sale of its onshore oil and gas assets to domestic energy supplier Seplat Energy Plc.

“Renaissance Africa Energy Company Limited is pleased to announce that the Minister of Petroleum Resources has granted his consent to the sale of The Shell Petroleum Development Company (SPDC) to Renaissance.

“This approval marks a significant step forward from the announcement of the Sale and Purchase Agreements in January 2024,” a brief statement from the consortium said.

On October 30, Olu Verheijen, special adviser to the president on energy, had  assured that the issues around Shell’s proposed sale of its onshore assets to Renaissance would be resolved soon.

“Aradel Holdings Plc, listed on the Nigerian Exchange Limited, is pleased to announce that the Minister of Petroleum Resources has granted his consent to the sale of The Shell Petroleum Development Company (SPDC) to Renaissance Africa Energy Limited.

“For Aradel, as a shareholder in Renaissance, this approval marks a significant step forward from the announcement of the Sale and Purchase Agreements in January 2024. Further details will be provided in due course,” Aradel’s Managing Director, Adegbite Falade said separately.