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Low oil prices affect capacity of firms to buy 56 marginal fields

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Low oil prices affect capacity of firms to buy 56 marginal fields
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By Udeme Akpan

Many indigenous oil and gas companies would not be able to buy Nigeria’s 56 new marginal oil fields because of the Coronavirus pandemic and low oil prices, which had already compelled operators to slash their 2020 capital budgets.

The Department of Petroleum Resources, DPR, had Monday, put forward the fields for sale in order to generate additional revenue for the government as well as increase the nation’s production capacity.

However, some chief executives, who preferred not to be named, said they would not be in a position to bid for the fields at this time.

But Seplat Petroleum Development Company Plc, have indicated that they would participate in the bid as the fields would enable them increase their production capacities.

READ ALSO: NNPC says top management appointments on merit

In a recent interview, the chairman of Seplat, Dr. Bryant (ABC) Orjiako, who confirmed the readiness of the company to invest in new assets, stated: “We have not changed from our very long term plan as we are constantly looking at acquisition opportunities. We did a successful acquisition of an entity which was Eland at the end of last year and despite the collapse of oil price globally and hardship in the global economy, we remained focused on acquisitions. When we see an acquisition, we said we are committed to price sensitive acquisition which means that we will not over pay, so, as the industry changes, it means that the prices that buyers are willing to pay will continue to change and we will change with this and continue to do acquisitions.

Commenting on the sale, Prof. Omowumi Iledare, the Ghana National Petroleum Corporation (GNPC) Professorial Chair in Oil and Gas Economics and Management, Institute for Oil and Gas Studies, University of Cape Coast, Ghana, said: “The government should consider both technical competence and financial status, as they are all important.    Financial affordability must not override technical capability.

“The government should also consider experience in Marginal fields operations. A novice should not get it no matter how reach the company may be. I am not saying they should be awarded to them in a discretionary version.”

In a message obtained from its website, the DPR had, listed the processes to include, “Registration and Pre-qualification, Data Prying, Data Leasing, Purchase of Fields Specific Report, Purchase of Competent Person’s Report (CPR), Technical and Financial Bid Submission, Technical and Commercial Bid Evaluation, Announcement of Winners and Farm-Out Agreement Negotiation and Signing of agreement.”

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