Nigeria is set to bring in $500 million from signature bonuses associated with the award of 57 marginal fields in its ongoing bid round, according to the Department of Petroleum Resources (DPR).
The bid round – which aims to spur indigenous participation in the local upstream industry – was launched last June and will see the award of licenses before Q1 2021. Of the more than 600 companies that applied for pre-qualification, 161 were shortlisted to move to the final round of the bidding process.
“For the signature bonus, what we did internally was to look at the Competent Person Report and objectively estimate the average signature bonus on that field,” said Sarki Auwalu, Director of DPR. “Some fields are high, while some fields are low. We estimate to have not less than $500 million, which is very much on the conservative side.”
To ease pressure on domestic reserves, Auwalu noted that signature bonuses will be paid either in U.S. Dollars or Nigerian Naira. Additional measures are being implemented to expedite the process by which assets are developed.
“Immediately after the payment of the signature bonuses and compliance with the farm-out agreement and farm out demarcation area, we will issue the award and bring the companies together for them to arrange how to enter the fields,” said Auwalu. “Going forward, we will give about 90 days during which the Oil Mining License holders will have discussions. We believe it will increase the reserves of this country, as well as provide a lot of stimulants to the economy.”