Nigeria Bid Round Panel Review

1. Nigeria Bid Round Panel Review

2. Panel Review Members S/No Name Affiliation 1) W. H. Olsen Advisor, Norway ----Chairman 2) Tunde J. Afolabi Amni International Petroleum 3) E. O. Akinmade Nigerian Agip Exploration Limited 4) A. E. Enemuoh Nigerian Petroleum Dev. Co Limited 5) Shannon Ross American Consulate, Lagos 6) Steinar Nja Norwegian Petroleum Directorate 7) Erik Abrahamsen Norwegian Petroleum Directorate 8) Christine B. Holst Statoil Nigeria Limited 9) Debbie Fern British Deputy High Commission 10) Greg Bates Canadian High Commission 11) Samir Passos Awad Petrobras Nigeria 12) Ian A. Fischer Esso Exploration and Producing Nig. Ltd. 13) Jide Ojo Conoil 14) Stan Rerri NEITI, The Presidency 15) Gunnar Soiland Norwegian Petroleum Directorate Support Members: 1) Khalid Mahmood IndigoPool (Schlumberger) 2) Ashraf Zeid IndigoPool (Schlumberger) 3) O. Malimor SIS (Schlumberger)

3. Improved transparency One of the objectives of the LR was to contribute to improve transparency and fair business practice in Nigeria

4. Support for local content aspiration Local content aspiration � did the industry support the objectives?

5. Implementation of the LCV strategy is seen as a success The LCV major issue Properly identified in advance Adequate information available Enough time to do due diligence

6. Accept for strategic upstream/downstream links Assess the success of the down stream / upstream integration?

7. Post bid � need of improvements How do you asses the transparency and fairness of the post bid process?

8. Don�t change the way the round is organised Do you recommend future licensing round to be organised in the same way?

9. Survey Summary Positive -Transparency & Pre Qualification process (+83%) -Guidance Notes & Rationale behind LCV (+83%) -Easy to register as a bidder (+88%) -Technical evaluation (+77%) -DPR staff available (+87%) -Model PSC easy to Understand (+87%) -Website efficient and easy to access (+67%) Need Improvement -LCV Process (-67%) -Data Availability (-77%) -Website updates (-50%) -Road Shows (-52%) -Transparency Strategic Deals (-78%) -Model PSC leave many issues (-57%) -Fairness and effectiveness of post bid process (-57%)

10. The Way Forward A firm schedule to close 2005 LR PSCs Allow sufficient lead time to plan / prepare next LR. Focus on key objective and processes Execute with firm terms and schedule BE FIRM � NO ALTERATIONS

11. BID EVALUATION Criteria Use One or Two criteria Include LCV as part of the policy Include cost oil in fiscal part of PSC Work program evaluation should be focused on technical requirements Minimum work programme should be zone/blocks specific Eliminate the monetary value of work program & impose range of activity Signature Bonus A biddable item.

12. Signature Bonus Signature bonus should be Market/Bid driven, no minimum bonus requirements Bidders must attach a certified cheque or bank draft deposit to their bid. DPR to prescribe a percentage of signature bonus e.g. required percentage 25-50% Bid winners who don�t pay within the deadline set for PSC signing should lose their deposit and rights Where there is only one bidder the Minister can accept/reject the bid

13. Local Content Vehicles Government policy on LCV is laudable, and the panel recommends its continuation with the following modifications That the information on short listed local companies, (after thorough assessment by the government) be made available to the Bidding Companies for further due diligence. That the Bidding Companies be given 90 days prior to bid round to select a LCV from a government provided list of pre-qualified local companies That the local companies be made to give financial undertaking to contribute their own equity in the licenses to which they had committed with the Bidding Companies, failing which the right to such assignment will be lost Encourage LCVs to meet international standards e.g. OECD guidelines

14. Strategic Assignments/First Right of Refusal The blocks with strategic assignment and or first right of refusal should be identified at the time of bid round announcement, with no post announcement modifications.

15. DPR and NNPC Clear definition of roles and responsibilities between DPR and NNPC All government parties must have an agreed PSC with industry prior to LR Bid winners should have a single point of contact till PSC signature

16. PSC PSC Develop and finalise PSC in consultation with the O&G companies prior to LR Keep the model PSC firm � NO modifications after the bidding is finished

17. Data Availability DPR will need to improve its data quality and data management capabilities, it is important to have short term solution for next LR and a long term goal for utilization of the National Data Repository Short term Recommendations: Improve data availability and quality Proper data room (Physical and Online) Data cost dependent upon quality & quantity Encourage third party spec data acquisitions Accurate block coordinates should be available from the announcement of the bid round

18. On Line Dataroom Website Data/Information on blocks available readily from the beginning of LR on the official website Tender evaluation software available from web site Availability of interactive questions and answers through website Website should be up to date at all times

19. A final summary The 2005 bid round was a major step in the right direction, but still potential for improvements and for making the next round even more successful Make more time available to plan and process license round Focus on key objective and processes Execute with firm terms and schedule Do no allow post bid alteration