Effective implementation of the Petroleum Industry Act (PIA) will ensure transparency in future marginal fields licensing bid rounds, some oil and gas industry experts have said.
The experts spoke in Lagos on Tuesday with reference to the conduct of last year’s marginal oil fields bid round.
Ayodele Oni, a partner with Broomfield Law Practice in described the conduct of the 2020/2021 marginal oil field bid round as “a brilliant idea by the government to raise funds.”
Oni said there were some positive takeaways from the process, in the sense that a number of bidders were able to come up with funds to buy the assets, in line with newer and better rules that guided the process.
However, Oni said many people criticized the defunct Department of Petroleum (DPR) for not doing a great job, as they claimed the process was not transparent, as the exercise was conducted in secrecy.
He said the exercise brought together strange bedfellows with different backgrounds in terms of technical capacity to develop the assets.
On the success of the bid, he said apart from the government raising funds through the exercise, the process involved more indigenous players and had the potential to increase the country’s oil production capacity.
Oni identified other challenges to include claims of corruption, inordinate delays and the list of preferred bidders, which was never issued publicly.
He said the owners of the marginal oil fields would now be independent of head lessors and have their own Petroleum Mining Lease (PMLs) under the PIA.
“With the PIA, we expect a more transparent process in future Marginal Field Licensing Bid Round. The powers of the minister have been reduced with better checks and balances.
“The PIA should be properly implemented and transparency should be entrenched in the next bid round,” he said.
Similarly, an oil and gas consultant, Joe Nwakwue, said it was too early to make an informed assessment of the 2020/2021 marginal fields licensing bid round.
Nwakwue said from the detailed study of previous bid exercises, awarding assets to multiple parties posed lots of challenges.
He said one was constrained to observe the rather high signature bonuses paid by successful bidders, noting that it might make it difficult for the awardees to raise funds for field development.
Nwakwue, who is also the former Chairman, Society of Petroleum Engineers (SPE), Nigerian Council, said completing the award process in such an uncertain environment was clearly a plus, though challenges of funding and technical capacity persisted.
“Awards to multiple parties, except where they jointly bided, should be avoided. We also need to be very clear on the objective of the licensing round. Are we raising money or giving blocks to parties that have what it takes to develop and monetise the assets?” he said. (NAN)