Communist Chinese Interest in Nigerian oil

[The Communist Chinese interest in Africa continues. Jan]

Following their response to the Federal Govern-ment's call to establish Independent Power Plants (IPPs) in Nigeria, South Korean and Chinese companies will get a total of seven blocks from the acreage on offer in the 2005 Bid Round.

However, the intense jostling among 120 Nigerian indigenous companies for equity interests in the oil blocks on offer, might have slowed down the process of the licensing round as the Department of Petroleum Resources (DPR) could not announce the applicants that scaled the technical qualification stage of the exercise as planned for yesterday.

Korean investors, comprising the Korea National Oil Company (KPOC), the Korea Electric Power Company (KEPCO), Daewoo Ship-building and Marine Engi-neering Company and POSCO Engineering and Construction Company Limited, signed on Monday a Memorandum of Understan-ding (MOU) with the Ministry of Petroleum Resources to among others, build an IPP with generating capacity of 2,250 mega watts of electricity and construct 1,200 kilometers of pipeline that will transport natural gas from Niger Delta fields up to the Abuja network grid.

For the investment, the Koreans are to get two deep offshore blocks and one shallow water block from the 14 acreage the Nigerian government had earmarked for strategic downstream partners.

The China National Petro-leum Company (CNPCO) on the other hand, will get four oil blocks for its willingness to invest in the construction of hydropower plant in Mambila, Plateau State, with over 1,000 MW capacity, as well as taking controlling stake in the 110,0000 barrels per day (bpd) Kaduna refinery.

Minister of State for Petroleum Resources, Dr. Edmund Daukoru told newsmen yesterday that the MOU signed with the Korean investors represents a milestone in Nigeria's quest for foreign investment to jump-start the economy.

Describing it as one of the achievements of President Olusegun Obasanjo's drive for foreign investments in the last six years, Daukoru said that the investment relationship entered into with the South Koreans was one with enormous potential for immediate benefits for Nigeria.

"They are areas where Nigeria needs investment. They (Koreans) came to us and we offered them opportunities for investment on a win-win basis," said Daukoru.

"Korea consumes as much crude oil as we produce in one day. They consume 2.1 million bpd and our production is slightly more than that at 2.4 millon bpd. They need access to crude oil, so we are offering them oil blocks in exchange for them building a pipeline of 1,200 km to Abuja.

"They are also prepared to build power plant that will generate 2,250 MW. That is the immediate package," said the minister.

He said that Daewoo is desirous of setting up a shipyard somewhere in the Niger Delta, as well as partner the Nigerian government to run a crude oil and LNG cargo fleet, where the Federal Government will retain some equity initially in trust for the Nigerian company and Korean investors having about 49 percent equity.

"Also with the Chinese, we recently packaged a deal involving operatorship of the Kaduna refinery plus hydro scheme in Mambila to generate thousands of mega watts of electricity. In exchange for that we are offering them four oil blocks. So I hope all these will send a powerful signal to all others who may be on the fence about making up their minds," Daukoru said.

Nigeria is currently facing energy problem as electricity generation by the Power Holding Company, which stood at around 3,000 MW is just half of the national power demand put at 6,000 MW.

However, at a meeting held yesterday in Abuja with applicants in the 2005 Licensing Round, the Director, Department of Petroleum Resources (DPR), Mr. Tony Chukwueke, said Korean and Chinese investors would, however, be required to also bid for the blocks already dedicated for downstream investors.

Chukwueke said the implication of this is while the Koreans and Chinese will have the right of first refusal, other companies can also bid for the 14 oil blocks but would have to bid higher than what these companies are offering.

"The Korean and Chinese are participating in the 14 blocks and other blocks in the open bid. It is clear the government will not award blocks outside of this (2005 Bid) process," he said.

Yesterday's meeting was called to announce technically qualified candidates of the 350 applicants and then issue bid certificates to the prospective investors.

According to the DPR director, 35 companies applied to bid for the 12 blocks in the deepwaters while 61 companies submiited applications for the six blocks in the continental shelf, 53 firms for the six onshore blocks and four companies set to vie for the 12 blocks in the Chad basin.

While three companies showed interest in the nine blocks on offer in the Anambra Basin, Chukwueke said no investors showed interest in the Benue Trough.

However, the announcement of the technically qualified companies could not be made yesterday as planned as the DPR could not get presidential approval on the Nigerian indigenous companies that will be listed as Local Content Vehicles (LCVs) for the eventual operators in about 40 blocks.

The announcement initially scheduled for Monday evening was later postponed till yesterday. But when the applicants reconvened again, the Permanent Secretary in the Ministry of Petroleum Resources, Hajia Ammuna Lawan-Ali said that consultations were still going on and that "the matter is before Mr. President and it will be premature for us to say much on the issue."

Source: AllAfrica.Com

URL: http://allafrica.com/stories/200507270809.htm...