By ChijiokeNwaozuzu

The need to invite foreign partners has become inevitable given that most local banks have not co-operated with marginal field operators in putting these fields into production.

However, such invitations run contrary to the core moral concept and principles of the marginal fields’ licensing exercise. The original principle behind this exercise whereby the government took undeveloped discoveries, which has proven oil, from the oil majors and awarded these to local companies, was to encourage indigenous capacity building in the upstream petroleum sector.

The indigenous marginal field operators were expected to employ Nigerian geologists and petroleum engineers, acquire workstations for their use, utilize other local skills in field development (in the office and on operational site), put local talent on site to supervise well drilling and produce the oil, and in the event, increase the pool of technically capable oilfield personnel who can replicate the same exercise elsewhere in Nigeria and abroad. Therefore, to invite technical partners would mean that the country still has not ‘indigenized’ the development of these marginal oil assets.

The Petroleum Minister provided some justifications for a continuation of the policy on marginal fields programme. Firstly, the Minister commended the efforts of indigenous upstream operators citing that marginal field operators currently account for about one percent of the nation’s petroleum production and that of the eight (8) oil assets that have so far been divested by the IOCs, at least four (4) are held by active marginal field operators who have continued to demonstrate remarkable technical ability in operating significantly larger assets. Secondly, the Minister stated that the successful awardees in the 2001 round have addressed corporate social responsibility as a critical element.

Thirdly, the operators have adopted development and production strategies that are in line with the nation’s Gas Flare Policy as well as global environmental guidelines on Green House Gas (GHG) emissions by ensuring full utilization of associated gas. Based on these modest achievements by the marginal field operators, the Minister explained that the Federal Government was encouraged to kick-off the second marginal field licensing round in line with the objectives of the local content policy.

However, in designing the modalities for the 2013 bid round the Minister of Petroleum, MrsDeziani Alison-Madueke, and the DPR decided to take into consideration the constraining factors that affected the 2003 bid round winners. These corrections aimed at enhancing the reputation and credibility of the marginal field programme were reflected in the eligibility criteria, evaluation criteria, and the general guidelines.

Eligibility & Evaluation Criteria

A total of 31 fields were offered in the second licensing round, with 16 of these located onshore and 15 in the continental shelf. The Petroleum Minister encouraged companies wishing to participate in the bid round to form consortia that would enable them leverage upon one another’s strengths.

To be eligible, a company must be registered in Nigeria and at least 51% of the beneficial interest of the company must be owned by Nigerian citizens; no single shareholder may own more than 25% of the shares in the company; the company must have upstream oil and gas experience; and the company’s Memorandum and Articles of Incorporation must authorize the company to conduct oil & gas exploration and production activities.

In addition, foreign companies may participate in the process by either incorporating a Nigerian branch with the Corporate Affairs Commission in Nigeria along the lines stipulated in the above eligibility criteria, or may wish to enter into joint venture (JV) arrangements with one or more local Nigerian companies. Considering past experience with marginal fields bid winners, the Nigerian Government is favorably disposed to joint applications.  DPR permits successful companies emerging from the bid round to engage with foreign financial and technical partners to jointly develop and produce the fields. The implication is that FOCs may decide to engage with the licensing process directly, or wait to engage with successful bidders.

A committee made up of representatives of DPR, leaseholders and external financial advisers are to assess the bid submissions with the objective of identifying those bids that are most likely to be successful in operating the marginal fields as well as further developing the Nigerian oil industry. Successful companies are to be notified and given further instructions on how to prepare and submit a more detailed technical and commercial bid.




Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.