Stakeholders in the country’s oil and gas sector have advocated the need for the Federal Government to reverse the award of 2020 marginal oil fields in the country.
They said the call was necessary due to the huge bidding cost and signature bonus which have prevented bidders from making headway on the oil fields.
They lamented that the huge increase in the bidding cost and signature bonus between 2003 and 2020,have affected investors and would not do the nation’s oil industry any good if there is no drastic measures in place to right the wrongs .
According to the stakeholders,the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) should consider refund the fund with a view to ensuring profitability of the marginal fields.
They spoke at the recent Arbiterz Marginal Field Conference, tagged: “From Licence to Oil: Fundraising for Marginal Fields”.
In his contribution, Mr. Collins Ibekwe, Subsurface Manager, Energy & Mineral Resources Limited, said: “Those who put the process together were not long term focused; they were too short term focused, but it will not be too late to say, let’s reserve this process, let’s return this money.
“You may say, my interest is to raise money for the government, but is that an optimal expectation? Should it not be better for the expectation to be, let’s grow new businesses; let’s grow these marginal fields and have many new indigenous operators that are capable.
“One of the ways to achieve this is for the government to tell itself the truth and say, ‘let’s return this money; let’s return this signature bonus and give these people a chance’’. It may sound unrealistic but thinking outside the box, that will be the real thing to do because it will give them the rest of inputs they will need to gather all the data they need to kick-start the process.”
Speaking, Ayodele Fasakin, CEO, Tritekk Consulting Limited and former Geoscience Business Manager, France, Schlumberger, also advised that the payment made for signature bonus be returned.
According to him,NUPRC should be involved and see itself as a partner to the point of ensuring that operators secure funding rather than a regulator interested in earning revenue.
Earlier, Chief Executive, NUPRC, Engr. Gbenga Komolafe, who was represented by Edu Iyang, Head, Basinal Assessment and Lease Administration, NUPRC, had said that the commission has engaged awardees to resolve issues arising from the 2020 Marginal Field award and has also concluded drafting of model licence document, which is critical for issuing the Petroleum Prospecting Licences (PPL) to the awardees.”
He offered recipes on how marginal field operators in Nigeria can access funds to bring their fields to production.
He said the commission understands that funding is a critical success factor in bringing the fields to production
He said investors should consider private equity, capital market, strategic alliance and debt financing to bring their fields alive
According to him,the Petroleum Industry Act,under section 95 (5) has also made provisions for holders of licence or lease by way of security, to assign, pledge, mortgage its interest, in whole or in part under the applicable licence or lease provided the consent of the commission is obtained.
This provision,he said, has provided a safety net for the financiers to provide funds for the development of oil and gas assets in Nigeria.
He emphasized the need for the marginal field operators to leverage on this provision to raise funds for their operations.
He disclosed that the commission is taking necessary steps to encourage funding and reduce cost per barrel by initiating measures to improve due diligence protocols to enable investors and operators access information prior to taking investment decision,encourage synergies in the use of shared facilities as well as facilitate crude handling/transportation agreements to ensure favorable terms for all parties.
He added that such measures would ensure field development will be carried out in line with approved work programme commitments and develop regulations to enable ease of implementation of the Petroleum Industry Act.
He also said concerted effort is being made by the NUPRC in collaboration with stakeholders to tackle the decurity issues in oil and gas assets in the country.