Nigeria will not hold bidding rounds for major oilfields until crude prices recover, and some upstream projects will be completed much later than originally planned, officials said in a web conference on Tuesday.
Nigeria, Africa’s largest oil producer, is grappling with a significant drop in oil prices and a collapse in global fuel demand caused by lockdown measures aimed at containing the new coronavirus.
The delay in some licensing rounds cut the country’s projected revenue from signature bonuses to 350 billion naira ($972.22 million) this year, from 939 billion naira originally expected, the officials said on the call, with most the anticipated revenue coming from license renewals.
“Where you require foreign investment … this is not a good time,” Mele Kyari, group managing director of the Nigerian National Petroleum Corporation, said of licensing rounds, adding “the appetite would be very very low”.
Nigeria is, however, accelerating bidding rounds for so-called “marginal” fields, which Kyari said were less impacted by low oil prices because they would likely be taken up by local producers and would require less capital to develop.
Finance Minister Zainab Ahmed said some upstream oil and gas projects would be delivered “much later than originally planned” due to scaled back government investments.
She added that Nigeria was having trouble selling some of its oil cargoes, and noted it would also have to cut production to below what it originally expected in the budget. The country, as part of an agreement with OPEC and other producing nations, agreed to trim output to help balance the global market.
As a result of the cuts and lower prices, the budget office director said projected oil and gas revenues would drop by over 80% this year.