Mohammed Shosanya,Lagos
Stakeholders in Nigeria’s oil and gas industry have advised marginal field companies to raise funds from local market in view of the current difficulty in raising same internationally.
They gave the suggestion at a forum organized by PwC Nigeria,with the theme: ‘Marginal Oilfield Licence: After Winning, What Next?’.
They advised marginal field companies to ensure the Special Purpose Vehicles (SPV) to be adopted for their operations are structured in a tax and regulatory optimal manner
They also implored marginal field operators to incorporate an ESG action plan into their operations to ensure easy access to scarce international funding.
They emphasized the need for a regulation that provides clarity and certainty to the burning issues facing marginal field companies.
Pedro Omontuemhen, Partner, Energy, Utilities & Resources and Africa Oil and Gas Leader, in his opening remarks explained the rationale behind the PwC’s oil and gas stakeholders forum:“We organised this event at a pivotal moment in the industry. Several new marginal oilfield licence holders who won the recent bid round are keen on moving ahead quickly in the journey to first oil. We aim to foster collaboration by bringing established industry operators to share their experiences and discuss best practices to enable the new players to succeed.
“Developing a marginal oil field is a capital-intensive project. Post the euphoria of winning, the next focus for new marginal oil field operators is to figure out how to achieve first oil production quickly whilst setting up a sustainable structure. We have financiers, producing marginal operators and other stakeholders in the room to provide insights on how to achieve this objective.
Dr Kelechi Ofoegbu, Executive Commissioner, Economic Regulation and Strategic Planning, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), who represented Engr. Gbenga Komolafe, Chief Executive Officer of NUPRC, emphasised that the Petroleum Industry Act (PIA) is phasing out the Marginal Field regime with the objective of equalising all oil and gas producers in Nigeria.
The NUPRC is willing to support any innovative financing arrangements that the industry is evaluating and mediate any disputes among licence holders..
Speaking as an operator, Dr Layi Fatona, Executive Vice Chairman, ND Western Limited, advised new marginal oilfield awardees to manage their cost profile and focus on long-term success.
He said partnerships are vital to achieving first-oil production in a timely manner. He advised marginal operators to prioritise human capital development and strategic partnerships.
Peter Olowononi, Head Client Relations, Anglophone West Africa, AfreximBank, noted that based on clearly defined risk management policies and procedures, the standard practice is to finance projects that are producing oil and gas.
However, Afrexim Bank recently adopted a different approach by working with some marginal field operators on a guarantee-backed facility based on technical expertise provided by competent oil service companies along with the equity contributed by the awardee.
Aysha Abba, Managing Director and Co-founder of Subdrill Services Limited highlighted the need for marginal field licence holders to demonstrate the commercial viability of their crude reserves in order to attract finance.