The Federal Government, through the regulator of the Petroleum Industry, the Department of Petroleum Resources (DPR), on Monday issued letters of award to winners and fresh operators that emerged at the end of the recently organised marginal oil field bid round.
During the exercise, about 57 oil fields were were on offer for prospective bidders and investors.
The DPR which issued the letters of award at an official ceremony in Abuja, did not however disclose the exact number of firms allocated the licenses, raising questions on the transparency of the process.
Details provided during the ceremony included that out of the 57 fields on offer, 11 were relinquished by Mobil Producing Nigeria (MPN); Chevron Nigeria Limited CNL (20), Nigerian Petroleum Development Company (NPDC) 8; Total Nigeria (5), Nigerian Agip Oil Companu (NAOC) (2) and other operators (11)
During the event, some of the companies invited to receive their letters of award included some indigenous operators in the downstream sector industry who have recorded some remarkable successes and are venturing into the upstream sector.
They include A.A Rano Nigeria Limited, Duchess Energy and Emadeb Energy Services Limited, Matrix Energy Limited, Shafa Exploration and Production Company Limited, among others.
AA Rano, Matrix Energy and Shafa Limited are notable downstream players that have registered their mark in the distribution of petroleum products in the country.
The DPR said the firms would be exploring a total of 57 marginal fields located on land, swamp and offshore terrains, which were put on offer by DPR in June 2020.
The Director/Chief Executive of DPR, Auwalu Sarki, said a total of 591 Expression of Interest applications were harvested from prospective investors, out of which 540 were successfully prequalified during the first Phase of the exercise.
At the end of the second Phase, 482 bids were received from 405 applicants.
Saeki said following the evaluation of the bids, 161 companies were shortlisted as potential
awardees, out of which about 50 percent met all conditions to become eligible for award of the operational licenses.
“We are set to ensure opportunities are extended to other deserving
applicants to fill the gap.
Although the director said the issuance of the letters of award marked the end of the bid round process, he said it is also the
beginning of the post-award phase.
With the lessons of the previous exercises, coupled with the refocused
approach of the DPR, the DPR director said a strategy has been developed to ensure the awarded marginal field operators achieve early development.
“The DPR will continue to follow-up and guide the awardees every step of the way.
“For instance, a guiding template of working agreement has been drafted for joint awardees and discussions have reached advanced stage
between DPR and Lease holders on the Farm-out agreement and other technical enablers, in a bid to
facilitate the attainment of first oil in record time.”
In addition, he said the DPR would organize a technical workshop with
all awardees for guidance on field development and operations.
To achieve this, he said the National Oil & Gas Business Opportunity Desk has been established in DPR to
synthesize opportunities across the value chain of the industry and creates a platform for investors, financiers, funders, and other intending partners to realize desired
Sarki told reporters at sidelines of the event held at the Transcorps Hotel in Abuja that the new operators are now expected to come up with a development work plan on how to produce crude oil from the fields.
Presenting a review of the marginal oil fields programme so far, the Head of the Basinal and Lease Assessment departmentnof DPR, Edu Inyang, said the 2020 marginal field development exercise had six objectives, namely attracting indigenous participation into the petroleum industry operations; increasing the country’s oil and gas reserves and production capacity; boosting technological transfer in the industry; job creation, attracting investment, and revenue generation to the government.
Inyang said with the end of the license issuing ceremony to the winner, the objectives of generating revenue for the government and attracting investment to the industry were achieved.
On the review of previous exercises, Inyang said the last licensing bid round was in 2003, during which 24 oil fields were on offer and 81 licenses were awarded to indigenous operators and investors.
Out of the 24 fields, he said seven were located offshore, while nine were on land and eight on the swamp.
After the exercise, he said the DPR conducted periodical assessments of the performances of the companies awarded operational licenses.
The first assessment exercise was in 2010, seven years after the exercise was concluded, which revealed that six out of the 24 fields that were given licenses were in full production.
The second assessment in 2016, which was 13 years after the licensing round, Inyang said the assesment showed that 10 fields were in production, while the last assessment carried in 2020, about 17 years after the award, revealed 13 fields progressed to production, while 11 fields were not in production.
The development, he said, was not in line with the objectives of the marginal field development exercise.
The observations from 2003 licenses award exercise included that a considerable time was spent before the farm-out agreements were concluded; there was no cover alignment among the awardees; there were disagreements leading to long litigations, which discouraged potential investors.
EDITOR’S NOTE: Ou initial report wrongly suggested rthe multinational oil companies were awarded the largest share of the latest marginal oil fields. We wish to correct the factual error. The correct reportage is that the 57 oil fields on offer during the 2020 bid round were actually relinguished to the Nigerian government by the companies from their basket acreages they considered of non-commercial value.
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