Nigeria has given two Asian companies preferential rights over five oil exploration zones due to be offered in a licensing round on Friday, ruffling the feathers of US rivals, Nigeria's top oil official told Reuters on Thursday.
Nigerian Minister of State for Petroleum Edmund Daukoru said that his government had agreed the deals with Korea National Petroleum Corp (KNPC) and Taiwan's Chinese Petroleum Corp (CPC) in return for huge investments in Nigeria's neglected industrial infrastructure.
Fending off US criticism that he was pandering to Asian interests, Daukoru said the last-minute deals were in Nigeria's strategic national interest. They represented a hope of development that Nigeria's Western investors have singularly failed to offer despite decades of involvement in Africa's top oil producer, he said.
"It is a conscious national policy that major strategic projects - gas pipelines, power stations, refineries, shipyards and railways - projects of this scope deserve to be treated as a package," Daukoru told Reuters in an interview on the eve of the bidding conference.
Western oil giants are set to face off with emerging Asian tigers in Nigeria's first ever licensing round on Friday, when 75 exploration blocks will go under the hammer, including 15 prized deep water areas in the Gulf of Guinea.
The United States hopes to source 25 percent of its oil from the Gulf of Guinea in 10 years, from 14 percent now, but fast-growing Asian economies also have their eyes on the relatively unexplored region where billion-barrel finds are still possible.
The Asian deals, agreed a week before the licensing, mean that any other bidder for two deep water blocks previously offered to all comers, known as 321 and 323, will now have to be a minority partner with KNPC.
Nigeria has given the right of first refusal for a 65 percent interest in blocks 321 and 323 to KNPC. KNPC must match the best bid for these blocks to take up the offer, and the best bidder will take 25 percent, with the remaining 10 percent reserved for a local partner. It also has preferential rights to 100 percent of onshore block 280, Daukoru said.
In return, Korea has agreed to build a 1,200 km gas pipeline from the southern delta region to the capital Abuja and 2,250 megawatts of power generation, Daukoru said.
Korean giant Daewoo has also agreed to build a shipyard to serve the oil industry in the Gulf of Guinea, build a railway line across Nigeria and partner Nigeria in an oil tanker venture to export Nigerian crude.
"If those downstream obligations are not met, we reserve the right to withdraw the blocks, so we are fully protected," Daukoru told Reuters.
Nigeria has given the right of first refusal to CPC for 100 percent in two onshore blocks, known as 274 and 275, in return for its promise to bid for 51 percent of Nigeria's Port Harcourt refinery in an upcoming privatisation. These blocks have recently been reclaimed by the government from Western companies because they had failed to invest in them.
A third strategic investor, China National Petroleum Corp (CNPC), has now withdrawn from Friday's bidding because Nigeria has agreed to find them new exploration acreage in return for its promise to operate the Kaduna oil refinery and build 10,000 megawatts of electricity in Nigeria's north-east, Daukoru said.
A Nigerian official said that some US oil companies which had intended to bid for the KNPC blocks had threatened to pull out of the licensing because of the deals.
All of Nigeria's current output of 2.5 million barrels per day is produced by Nigerian National Petroleum Corp in five joint ventures operated by Royal Dutch Shell, ExxonMobil, Total, Chevron and ENI.
Responding to criticism that the preferential treatment might put off the best bidders for these blocks, Daukoru said:
"The best bidders have not helped with our national aspirations. No operator has talked railway to me, no operator has talked shipyard, no operator has talked about generating so much. Nobody has shared our aspirations with us."
"We are in a hurry to develop. The oil industry has been an enclave industry. We want to break out of the enclave and merge with the greater economy of the country and we are not getting the response we expect and deserve."
Because of the last minute changes to the offering, three additional deep water blocks were added to the bidding conference just one week ago.
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