Emmanuel Addeh appraises the journey so far in the award of marginal fields announced by the federal government, through the Department of Petroleum Resources, last year
In June last year, the federal government commenced the process of awarding marginal oilfields to qualified bidders, especially indigenous oil and gas companies that had shown capacity and resilience over the years.
Coming at a time that the country’s revenue had gone south due to headwinds occasioned by the vicissitudes of the international oil market, resulting in falling prices and deteriorating foreign exchange earnings, the development was not only auspicious, but made a lot of economic sense.
The most basic definition of a marginal field in the country is any field that has been discovered and has been left unattended for a period of at least 10 years, from the date of first discovery or anyone so-called by the president of Nigeria.
In essence, they are non-producing or un-appraised fields within the oil and gas acreage already covered by a petroleum licence, which the licence holders have considered as not being profitable for development.
The bid was also a sort of victory for stakeholders who had continually pressured the federal government to conduct an oil round for the purpose of raising revenue to fund some of its critical projects.
Innovating processes and procedures
In announcing the start of the process, the Department of Petroleum Resources (DPR) the implementing agency for the bid round, introduced quite a number of changes, including the disclosure that the bid was open to indigenous companies and investors interested in participating in exploration and production business in Nigeria.
The DPR said that a total of 57 fields located on land, swamp and shallow offshore terrains were on offer, adding that for the first time, the exercise which will be conducted electronically.
The process, the regulator said, will be straightforward, starting with the expression of interest/registration, pre-qualification, technical and commercial bid submission and bid evaluation.
Nigeria was expected to rake in at least N2.3 billion on non-refundable application fees for the ongoing marginal oilfields bid rounds, with the agency’s Director and Chief Executive Officer (CEO), Mr. Sarki Auwalu, promising Nigerians of an open and transparent process.
The agency’s guidelines on the 2020 oil bid round exercise indicated that payment by interested bidders shall attract non-refundable chargeable fees on application for N2 million per field.
It added that the bid processing fee of N3 million per field, data prying fee of $15,000 per field, data leasing fee of $25,000 per field, competent persons report of $50,000 and $25,000 for fields specific report will also apply.
With the above, interested bidders were expected to pay a total of $115,000 in statutory fees and another N5 million in local currency, the agency noted.
At the official exchange rate of $360/$1 at the time, the 57 oil fields on offer would have yielded N2,364,800,000, including the N5 million payment.
The agency had added that all application fees and processing fees were expected to be paid into the Treasury Single Account (TSA) while signature bonuses were expected to be paid into the federation account.
“Also, fees for data leasing, data prying, Competent Persons Report (CPR) and Field Specific Report should be paid into the National Data Repository (NDR) account for repayment.
“According to the approved guidelines, applicants must show evidence of technical and managerial capability and must also demonstrate the ability to fully meet the objective of undertaking expeditious and efficient development of a marginal field,” it had stated.
Transparency as guiding principle
To ensure a break from the past, whereby oilfields were awarded based on factors other than merit, capacity and competence, the organisation assured Nigerians and the international business community that the federal government’s bids for the country’s marginal fields would be open and transparent.
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