Nigeria to evaluate level of hydrocarbon reservoir in unallocated oil blocks

Sep 12, 2001 02:00 AM

Preparatory to a fresh round of bidding scheduled to hold next year, plans are afoot by the Nigerian federal government to evaluate the level of hydrocarbon reservoir in unallocated oil blocks in deep offshore areas. Towards this end, the Federal Ministry of Petroleum Resources, through the Department of Petroleum Resources (DPR), may soon engage the services of multinational seismic data acquisition and evaluation companies to undertake the evaluation exercise.
A source in the industry said the evaluation became necessary in view of the policy thrust of the government. The source who blamed the recent disagreement between some oil companies and Nigerian National Petroleum Corporate (NNPC) on the PSC agreement for oil blocks allocated last year on inadequate information on the level of hydrocarbon deposits in the blocks, said the present move is aimed at avoiding the same pitfalls.

The source stated further that though the federal government is anxious to increase the level of reserve and production, its policy direction will largely be determined by the anticipated level of hydrocarbon reservoir, which will be known through appropriate seismic acquisition and evaluation or interpretation skills. A DPR official who corroborated the above position stated that, if proper ground-work had been done on the blocks, negotiating a PSC agreement shouldn't have taken a long period of time such as the country had witnessed in the last seven months.
The DPR source said negotiation of PSC agreement between the prospective leaseholder and NNPC could be facilitated through this process as the nature of any oil blocks would have been determined before the bidding exercise actually commenced.
"Those in politics want to increase the country's proven reserve and production level, while the technocrats or professionals if you like, want to do their job in such a way that no one will apportion blame (to them) in the future; that is why we are taking a look at the whole issue of fresh oil block bidding procedure", said the source.

The source said further that an effective appraisal of the conditions of the blocks, will even assist the NNPC to structure its PSC agreement in such a way that benchmarks may be formulated for all operators within the same geological character and water depth. Though, the actual blocks to be re-evaluated is yet to be determined, it is however believed that all the blocks not allowed among the 22 offered last year, will top the list of the reservoir areas.
But a senior Geophysicist with a multinational prospecting company believes that whether government appraises the block on a regular basis or not, oil companies will always carry out their own evaluation of the blocks before putting their money in them. According to him, oil companies usually rely more on the result obtained from their own evaluation to determine the bidding fees than the result from the DPR.
The industry operative said the delay in signing PSC agreement for the eight oil blocks allocated late last year was mainly due to the business approach exhibited by the oil companies and the NNPC. NNPC Group Managing Director, Mr. Jackson Gaius-Obaseki had stated that in negotiating the PSC, a thorough job must be done to protect the interest of Nigerians and the future generation.

Source: The Guardian
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