Nigerians To Change Terms Of Oil Contracts In JDZ, And Take Over Offshore Blocks; NPDC Also Says It Has Partnered In JDZ

The Nigerian state-owned company that is building a national petroleum company said it would begin changing contractual terms that now allow its foreign joint venture partners to be paid in crude oil to recover their exploration costs, and was bidding in the Nigeria-Sao Tome Joint Development Zone for some of the blocks on offer.

Now it will pay in cash, it said, apparently because of the soaring price of oil, which neared $50 per barrel yesterday.

In a story in the respected Nigerian daily The Guardian and first reported on Monday in the daily Financial Standard, the Nigerian Petroleum Development Corporation (NPDC) said it plans to exercise the policy in the Nigeria-Sao Tome Joint Development Zone (JDZ).

Most surprising was the claim that the NPDC is among the bidders for some of the blocks on offer in the current licensing round. Prior to today's news, which was couched in vague language at the end of a long story, the government had not revealed that any bids from the NPDC were pending in the Nov. 15 licensing round, which closed Dec. 15.

As a contractual issue, both the secret bidding and the new terms could delay signing of Production Sharing Contracts in the Joint Development Zone that are affected by the oil-for-costs provisions.

The NPDC company has seized 15 oilfields from three multinationals in recent weeks and was planning to take over others offshore.

The Guardian said:

NNPC may review policy on strategic alliance with oil firms
By Yakubu Lawal
THE Nigerian National Petroleum Corporation (NNPC) may have reviewed its policy on strategic alliance with oil companies in the upstream sector.

Specifically, the corporation will under such partnership pay cash for its commitment to the agreement as against crude oil being used in the previous deal.

A top executive in the NNPC told The Guardian that the new policy thrust is a departure from the former agreement where the corporation paid operators of such alliance with crude oil.

...

"There was need for us to review this kind of agreement and that we have done. We will not use crude oil to pay for such services in our subsequent agreement, rather we shall make payment in cash," the source said.

"The Guardian sources stated further that for Chinese firm, which had indicated interest to work with the NNPC's subsidiary, Nigerian Petroleum Development Company (NPDC), the new policy would apply to them.

"If we are lucky and we experience high crude oil, mode of payment will be faster, but if otherwise, we will make out money to pay them out of the crude oil produced from such fields," the source said.

According to the official, the main reason for going into such alliance is to have access to fund for the development and be able to improve on the technical skill of the Nigerian workers.

...

Last year, three multinationals ceded the operatorship of five fields to NPDC, while the company was also brazing up to take over blocs in the deep water area.

It was also gathered that plans were in top gear to bid for oil blocs in some African countries to strengthen the tentacles of the nation's oil firm.

...

Officials of the NNPC also stated that NPDC would participate in the Joint Development Zone oil average between Nigerian, Sao Tome and Principe.

The officials also pointed out that in the soon to be flag-off bidding round by the government NPDC would seek to acquire more blocs along with some partners.