By CLARA NWACHUKWU

Ahead of the forthcoming bid round, and to institute transparency and boost marginal field contribution to Nigeria’s crude output, the Federal Government has been cautioned against the award of oil fields on discretionary basis.

This was part of a 20-point recommendation by Tandice-B Solutions Limited, at a one-day round table, on Maximising Value from Nigeria’s Marginal Oil Fields: A Survey of Past Awards, in Abuja last week.

The firm urged that “future oil sector legislation, whether the Petroleum Industry Bill, PIB, or other laws, should void the statutory rights of the President and minister to approve acreage awards on an ad-hoc discretionary basis, and instead require open, and competitive auctions for all acreages.”

Accordingly, it urged the Presidency and the Ministry of Petroleum Resources to respect all results of the bid evaluation process and endorse the industry regulator, Department of Petroleum Resources, DPR’s final list of winners.

It added that intervention should only be permitted in the event of issues arising from an award, in which a public statement must be issued explaining the decision.

Other agencies and arms of government such as the Nigerian Extractive Industries Transparency Initiative, NEITI, and the Senate are recommended to “be allowed to independently monitor all marginal field award processes.”

In its assessment of the prevailing circumstances in Nigeria’s marginal fields operations, Tandice-B said its recommendations are meant to improve the quality of future marginal field awards and performances.

The assessments are based on setting goals for marginal field development, identifying the fields, gathering data for the fields, awarding the fields, accessing financing for them, and the fields development.

Other recommendations include that the federal government should enforce the “drill or drop” asset relinquishment rule to boost national production, especially as only seven out of the 24 marginal fields awarded in 2003 have been brought to production.

In view of the low contributions from this sub-sect, government is also encouraged to initiate long term sectoral and asset planning to improve the quality and timing of field awards.

Furthermore, for purposes of accountability, Tandice-B suggests the involvement of the Central Bank of Nigeria, CBN, to enforce the payment of signature bonuses.

In view of the difficulty in accessing funds for fields development, the firm recommends that government creates “an indigenous operators’ fund to assist qualified field operators who struggle to obtain debt finance.”

Other recommendations have to do with the independence of the DPR as an industry regulator as well as its capacity to effectively police the industry in terms of funding, requisite skills, and availability of tools to carry out its statutory functions and enforce compliance.