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Investors are worried about lack of information on the marginal fields bid rounds which they said should have been nearing the final stage by now, given the level of seriousness the government attached to the exercise mid last year.
They are more disturbed that activities relating to the exercise have been relegated to the background because of the politics of a purported second term for President Muhammadu Buhari. This, they say, is working to the detriment of the nation’s economy.
Some of the stakeholders who spoke to BusinessDay lamented that the lack of a scheduled programme for the exercise has left prospective investors more confused now than before, as they are not getting any information, even from the Department of Petroleum Resources (DPR).
An officer of the Department of Petroleum Resources (DPR) who spoke to BusinesssDay unofficially, said the agency has completed all the required processes and is ready to conduct the exercise anytime government gives the go ahead.
“We are waiting for the minister of petroleum resources to tell us to go ahead and conduct the bid round but until that happens, we cannot do anything. But one thing I can assure you is that we are ready for the exercise,” he said.
The Federal Government, through the Department of Petroleum Resources (DPR) had last year set the guidelines for the marginal oil field bid round for 46 oil acreages which were to take place late last year or early this year .
Some of the stakeholders are however skeptical about the viability of the exercise if the Petroleum Industry Bill (PIB) is not passed, as the fiscal regime that would guide the operations of marginal fields operation are embedded in the bill and a failure to pass it before the licensing round takes place could create uncertainty regarding how investors would operate.
The prospective investors are to pay $300,000 signature bonus .
Abiodun Adesanya, former President of the Nigerian Association of Petroleum Explorationists (NAPE ), reacting to the development, said: “We have been hearing stories of an imminent marginal field licensing round, the delay in the announcement may not be unconnected with the ongoing work on the PIB.
“My guess is that the fiscal regime for the new marginal field licensing round may not be widely different from the one used in the last exercise and that may have formed the basis for what is contained under marginal fields in the draft PIB presently with the legislators,” he said.
“Therefore to avoid an uncertain situation of being awarded these fields, with the fiscal frame work susceptible to modification when the bill is finally passed, some discretion would naturally be expected by would-be participants if they know what they are doing. A way around this is to request for some stabilisation clauses for protection if the award is made before the passage of the bill”, Adesanya said.
On whether the financial institutions in the country would support the exercise, Abiodun Adesanya, who is also the Managing Consultant of Degeconek Nigeria limited, said he can imagine that some financial institutions would still participate but it is going to be tough to get Nigerian banks to fully embrace the funding of the development of these round of marginal fields in the way they did with the earlier ones, more so, if the current liquidity situation in the banking sector persists.
“They would certainly be more cautious and so raising capital would not be as easy as before. The approach to developing these fields js changing already and banks would have to adjust. For example, contractor financing and/or turnkey mode of developing the fields using service companies is increasingly becoming popular”.
The federal government embarked on the award of marginal fields in the late 1990s after international oil companies (IOCs) had abandoned significant acreages unappraised and left others to lie fallow for many years, even after oil discoveries, largely because the fields were not commercially viable for the oil majors to deploy their expensive technologies and resources.
