Nigeria, an OPEC member, was to announce winners on Friday from among 300 local and global energy companies angling for exploration rights in over 75 parcels from Lake Chad in the northeast to plots in the Gulf of Guinea.
Nigeria deputy oil minister Edmund Daukoru said winners will be required to pay between US$500,000 and US$50 million as "signature bonus" for their oil licenses in Nigeria's largest-ever exploration offering since oil was discovered nearly 50 years ago.
The country has toughened contract terms, betting that with prices at above $67 a barrel it can attract strong bids for the areas on offer, particularly in the deep waters of the Gulf of Guinea.
"As this is Nigeria's first bid round it's virgin territory. It's a huge round, there's lots of interest and there's a wide variety of geology. It will be full of surprises," said a senior Western oil executive who is bidding for a deepwater block.
The United States hopes to source a quarter of its oil from the Gulf of Guinea in 10 years, from 14% now, but fast-growing Asian countries also want a piece of the action in a region where billion-barrel finds are still possible.
US plans to source a quarter of
its oil from the region in 10 years
Two Asian companies got a head-start in Friday's race by obtaining preferential rights over five blocks, which Nigeria granted them a week before the licensing in return for promises of investments in its derelict industrial infrastructure.
Africa's most populous country has failed to translate its oil wealth into basic services for the majority of its 140 million people, most of whom live on less than $1 a day.
Since Nigeria started exporting crude oil in the 1970s billions of petrodollars have been swallowed up by foreign firms as profit or by corrupt and inefficient governments.
Edmund Daukoru said this week's last minute deals with Asian firms represented a new hope of development that Western investors had failed to offer in decades of involvement in Nigeria.
The deals with Korea National Petroleum Corporation (KPNC) and Taiwan's Chinese Petroleum Corporation (CPC) displeased rival US companies, some of which threatened to pull out of the bidding, a Nigerian official told Reuters.
Response to criticism
Responding to criticism that preferential treatment on some blocks for KPNC and CPC might put off the best bidders for the areas, Daukoru said on the eve of the bidding round: "The best bidders have not helped with our national aspirations.
"We are in a hurry to develop. The oil industry has been an enclave industry. We want to break out of the enclave and merge with the greater economy of the country and we are not getting the response we expect and deserve (from Western investors)"
Nigeria's deputy oil minister
No operator has talked railway to me, no operator has talked shipyard, no operator has talked about so much generation apart from these toy things of 250 megawatts.
"We are in a hurry to develop. The oil industry has been an enclave industry. We want to break out of the enclave and merge with the greater economy of the country and we are not getting the response we expect and deserve (from Western investors)."
All of Nigeria's current output of 2.5 million barrels per day is produced by Nigerian National Petroleum Corporation (NNPC) in five joint ventures operated by Royal Dutch Shell, ExxonMobil, Total, Chevron and ENI.