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Court Blocks Nigerian Government From Auctioning Oilfields

Nigeria’s Federal High Court has ruled that the government cannot include eight oilfields in its latest oil auction to local companies because the legal status of the licenses continues to be contended in court.

Nigeria’s federal government launched earlier this week a so-called marginal fields bid round for onshore and shallow-water oil blocks to local oil firms. The bid round is the first of this type since 2002, with which the government hopes to raise money amid the oil crisis and the COVID-19 pandemic, which is battering Nigeria’s economy and oil industry.

The bid round includes 57 oil blocks, including 11 blocks which the Nigerian government had revoked from companies in April on the grounds that they had failed to develop them and bring them to production.

The companies whose licenses were revoked appealed the decision of the Nigerian Department of Petroleum Resources and the federal high court granted this week an injunction, preventing the government from auctioning off the 11 oilfields “pending the determination of the substantive suit,” Bloomberg reported.

The so-called marginal fields are a small portion of Nigeria’s oil production. In 2018, such oilfields allocated in the 2002 bid round pumped 65,000 barrels per day (bpd), or just 3 percent of the production in Africa’s top oil producer, according to data from the Department of Petroleum Resources cited by Bloomberg.

Meanwhile, Nigeria, one of the laggards in compliance in the OPEC+ deal, said that it is committed to achieving full compliance.

“Nigeria has made concerted efforts to adhere to this commitment and will continue to do so unequivocally,” Timipre Sylva, Minister of State for Petroleum Resources, said on Instagram this week. 

Nigeria cut its production in May to 1.613 million bpd, for a compliance rate of about 52 percent, Sylva said.


“It is worthy to note that current daily crude oil production is well below the period commitment level of 1.412 million barrels per day and will translate to full compliance by end of June 2020,” the minister added, noting that “Nigeria will continue to fully comply with the agreement and look forward to improving on its compliance levels for the lifespan of this historic intervention by OPEC+.”  

By Tsvetana Paraskova for Oilprice.com

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