Holders of marginal field licences who have failed to produce crude over the years will have them revoked in March next year, BusinessDay is reliably informed.
The marginal field licences were issued ten years ago with the proviso that holders who failed to poduce within five years would have their licences revoked. At the end of the first five years however, the licences were reviewed, and the tenure extended by another five years. That extenson will expire in March next year and BusinessDay is reliably informed that this time, government will revoke the licences of those not producing.
Only about nine of the 24 operators that were licensed are currently producing, contributing 2.4 per cent of the country’s crude production of 2.5 million barrels per day, according to the Department of Petroleum Resources (DPR)
The remaining 15 operators have not done any appreciable work on their fields and there is nothing to suggest that the fields would begin production anytime soon.
Our source said government has given the operators enough time to resolve whatever challenges they were encountering and that if they still could not cope, more serious investors should be allowed to buy the assets.
Another industry operator who does not wish to be named told BusinessDay that the said marginal field operators would first be encouraged to present their work programmes, and that thereafter the government would organise a workshop for the awardees in order to intimate them with its next line of action.
The awardees have been bogged down by series of problems including infrastructure deficits around the fields, lack of industry experience, high interest rates on loans; poor oil metering tools and insecurity.
In 2003, twenty-four marginal fields were allocated to 31 indigenous companies as part of the marginal fields licensing round. The companies include Brittania-U which is the operator of a sole risk license in the Ajapa field (OML90), Platform Petroleum and New Cross Petroleum Limited in the Egbaoma field (OML 38). Waltersmith Oil Limited & Morris Petroleum in Ibigwe field (OML 56) were also on the list.
Others are Midwestern Oil, which operates the Umusadege field (OML 56) , Pillar Oil operates the Umusati/Igbuku Marginal Field located in OML 56 under a sole risk license, Frontier Oil is the operator of the Uquo field under a JV with Seven Energy, and Energia – is the operator of the Ebondo/Obodeti Marginal Field
The goals underlying the award included boosting indigenous participation in the oil and gas industry.
Tokunbo Orimobi, a Lagos based lawyer, while carrying out an overview of the activities of marginal field operators said the industry regulator, the Department of Petroleum Resources (“DPR”)has been forthcoming in its willingness to update Nigerians on developments with the bid round.
Orimobi however said the financial challenges and technical capacity hindrances faced by the indigenous operators have over the years made some operators to act as fronts or proxies for foreign investors, who end up buying some stake in these assets. The amount of risks involved in developing these types of fields require certain investment layouts that are best taken on by foreign investors assuming the roles of technical partners via Joint Ventures.
Olusola Bello
