Buyers react as FG concludes sale of 57 marginal fields
Buyers react as FG concludes sale of 57 marginal fields
By Udeme Akpan Nigeria’s 2020
marginal fields round is gradually coming to a close, with many indigenous
companies emerging as winners of bids for the 57 fields on offer. A marginal
field is any oil and gas field with relatively small reserves reported annually
to the government and has remained unproduced for a period of over 10 years.
It is also known as “fields not
considered by licence holders for development because of assumed marginal
economics under prevailing fiscal and market terms.” Investigation by Vanguard,
weekend, showed that the Department of Petroleum Resources, DPR, ‘the technical
arm of the Ministry of Petroleum Resources, MPR, with a broad responsibility
for implementing government policies, has already issued letters to successful
bidders. However, of the 161 companies short-listed for this final stage, only
companies with the technical and financial capacity to develop the fields up to
first oil, and pay between $5 million and $20 million signature bonus within 45
days stand the chance to finally emerge. Already, many companies, mostly
operating indigenous oil and gas, have paid for their fields, while others,
including members of the Petroleum Technology Association of Nigeria, PETAN,
are still making efforts. Others without the desired capacity would
automatically lose their fields to others. But some companies that might not be
able to meet up the target have reacted, alleging that the signature bonus is
exorbitant, and that the DPR had not been transparent in the management of the
bidding process. Specifically, in different interviews with Vanguard, the
buyers, who pleaded anonymity, as it could affect their chances to buy the
fields, also argued that an independent committee or jury, made up of the
international oil companies, IOCs, Nigerian National Petroleum Corporation,
NNPC, and the Ministry of Petroleum Resources, could have been established to
review the bidding and engage with bidders. However, in a telephone interview
with Vanguard, the Director/CEO, DPR, Mr. Sarki Auwalu, said the agency had
been very professional and transparent in the handling of the 2020 marginal
fields bidding.
On the cost of the field, he said: “We are aware of the low oil price situation, and did not arbitrarily fix the cost. We reviewed the prices, which the bidders had offered, and then adopted average prices as the cost of the fields. So, we did not just fix the prices, we actually took into consideration, the prices which they offered to buy the fields.” Also, commenting on the timeline, he said: “We have acted in accordance with the guidelines regarding time-lines. There is nothing wrong about this because the guidelines have also given DPR the authority to adopt additional other legitimate ways and means that could enhance the success of the bidding. “In other words, we have been very transparent. The DPR has adequate and experienced human capital or capacity to professionally manage the process as we have exhibited in the ongoing exercise.” We have also collaborated with other agencies that are involved in the entire value chain. “We do not depend on external bodies to carry out our responsibilities because it is the DPR that licences and regulates the operations of such external institutions or companies, including the International Oil Companies, IOCs.
” The guidelines obtained by
Vanguard stated: “Following the completion of the pre-qualification of the
selection process, the recommendations shall be forwarded to the honourable
Minister of Petroleum Resources and subsequently to the President and
Commander-in-Chief of the Armed Forces of Nigeria pursuant to the Petroleum
Act, 1969, as amended, for approval of successful applicants shall thereafter
be duly notified by the DPR for payment of signature bonus prior to the Award.”
Commenting on funding and other issues, lead promoter, Energyhub, Nigeria, Dr.
Felix Amieyeofori, said: “Local banks have learnt their lessons from the 2010
IOC divestment, and so they have significantly reduced their oil and gas
investment. I do not, therefore, see them being bullish in this marginal field
season. They will tread carefully. “We have to look up to foreign investors to
salvage the situation. They will have to trust the process enough to risk their
funds. There are cheap funds, but our country risk will make every fund
relatively expensive.” However, 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,
also said: “Usually, the first important feature in competitive bidding is
transparency and acceptability before bonus payment.”
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