Nigeria Oil Auction Fails to Raise Interest

Nigeria’s outgoing government has failed to raise interest from major oil companies in its latest oil license auction, with industry executives fearful of contracts being revoked after the government’s new government swears in.

Last Friday’s auction, where only 18 of 45 blocks offered were auctioned off, was the third of its kind since 2005.

The government had privately negotiated preferential rights on oil blocks for 10 companies, including large state owned oil and gas firms from China and India, in exchange for promises of billions of dollars of investment in infrastructure.

But many of these companies were scared off by concerns that contracts may not be tied up before President Olusegun Obasanjo hands over power on May 29 to his chosen successor Umaru Yar’Adua.

“They were scared off by all the things people have said,” said Tony Chukwueke, Nigeria’s oil industry regulator. Instead, the bidding was dominated by little-known companies which may, with their limited experience, find it harder to develop oil blocks than more established companies operating in Nigeria.

Executive say they will be watching closely to see who Mr Yar’Adua will install in the oil ministry after May 29, and whether he will come under pressure to replace some of the interested parties who took blocks.