Nigeria Set for New Oil Licensing Round

By January 15, 2020 Investment News

The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation, (NNPC) Mele Kyari yesterday disclosed that the federal government is ready to launch a new oil licensing round.

Kyari also declared that more effort would henceforth be concentrated on the production of Natural Gas Liquids (NGLs) and natural gas, to better comply with its crude production quota under the Organisation of Petroleum Exporting Countries (OPEC) agreement.

The GMD who spoke with reporters on the sidelines of the Atlantic Council Global Energy Forum in Abu Dhabi, yesterday, noted that the licensing round is part of Nigeria’s bid to hit a 3 million barrel a day b/d output target by 2023.

According to him, Nigeria is still on track to launch a new oil licensing round in the first half of 2020 for both offshore and onshore blocks but would not specify a date.

Many international oil companies have said the country needs to offer more attractive fiscal terms. Nigeria in early November increased taxes on companies operating in its deepwater blocks.

Kyari however revealed that Nigeria’s legislature was in the process of reviewing its petroleum law which will take care of the concerns.

Natural gas liquids (NGL) are components of natural gas that are separated from the gas state in the form of liquids. This separation occurs in a field facility or a gas processing plant through absorption, condensation or other methods. Natural gas liquids are classified based on their vapor pressure.

Kyari, noted that the shift is to increase gas production and that OPEC quotas only apply to crude oil production, not condensate.

“You can produce condensate which is not part of the OPEC commitments. We are focusing our production to more gas-based reservoirs so that we can continue to grow our production while maintaining balance in the market,” he said.

While stating that Nigeria’s December oil production was 2.2 million b/d, the NNPC boss however declined to disclose how much of that was crude and how much of it was condensate. He nevertheless noted that the country was fully compliant with its quota of 1.77 million b/d for crude.

“We have met our commitment by December,” Kyari said on a panel at the forum. Nigeria was currently counting production of its new Egina grade as condensate, he said.

Egina crude has a gravity 27.5 API, significantly heavier than typical condensates , and a sulfur content of 0.17 per cent, according to a source. The oil is expected to have high yields of gasoil and distillates.

S&P Global Platts’ latest survey of OPEC production estimated Nigeria’s December crude production at 1.84 million barrels a day  b/d. Starting this month, Nigeria’s quota drops to 1.75 million b/d under the OPEC+ coalition’s agreement to deepen its production cuts through March.

Nigeria has been criticized by many of its OPEC+ counterparts for its habitual flouting of its production cap.

The United Arab Emirates (UAE) energy minister Suhail al-Mazrouei told reporters at the forum that Nigeria, along with fellow serial compliance laggard Iraq, had improved their performance in December.

“December compliance of both Iraq and Nigeria have improved and we thank them for that,” Mazrouei said.

Source: Leadership