Nigeria Indigenous oil firms, A.A. Rano, Shafa Exploration, Matrix Energy, and Vhelblerg Exploration were among oil companies awarded marginal oil field licence by the Department of Petroleum Resources, DPR, on Monday. The award came a year after 2020 marginal field bid round began with 591 companies applying to win 57 oil fields on offer. The oil fields are located onshore, swamps and offshore.
DPR estimates that Nigeria would produce additional 100 million barrels of crude oil from the 57 fields, in the coming years. Speaking at the award ceremony in Abuja, DPR Director/CEO, Engr. Auwalu Sarki said the fields would boost Nigeria’s daily oil production capacity beyond the current three million barrels per day.
Engr. Sarki explained that after undergoing lengthy and vigorous process, 161 companies were shortlisted as potential awardees out of which 50 percent have met all conditions. He noted that the department would not abandon the companies after the award but would work with them to ensure immediate development and attainment of first oil in record time.
He said: “The journey began exactly one year ago, 1stJune 2020 with the launching of the Bid round registration portal. The portal eased the registration and application process and ensured a transparent exercise. “It also provided the platform for the virtual data room.
It is important to state that the industry-enabled National Data Repository (NDR) provided all the requisite technical and logistics support for the successful conduct of the exercise”. He said DPR would ensure that the indigenous companies face minimal challenges from the International Oil Companies, the original lease owners for the fields.
He explained that the challenges that hindered the attainment of full development of the last marginal fields award 17 years have been considered and tackled. He pointed out that of the 24 fields awarded in 2003, 11 fields remained undeveloped locking in over 40 million barrels of oil. “With the lessons of the previous exercise we want to refocus, change the approach, we have developed strategy to ensure you (the companies) and the awarded fields achieve early development.
“The DPR will continue and guide all of you every step of the way. For instance, the guiding template for working agreement has been drafted for joint awardees and discussions have reached advance stage between DPR and lease holders on the farm out agreement”, he added.
Sarki expressed optimism that the development of the oil fields will stimulate job creation because “all the awardees have to recruit people which mean more taxes and revenue to government and at the same time it enhances the GDP because the contribution of the industry to the GDP is very low”.
On her the awards would improve Nigeria’s oil production, he said: “What DPR did was evaluate various recovery factors. We saw the average recovery value that we do have now, ranges from 27-38.
If we increased this by five percent only across, we will hit the 40 billion barrels and at the same time we will hit above three million barrels. “We have identified 7,000 reservoirs and we are producing from about 1,700 reservoirs. We took each of the producing reservoirs to see what kind of enhanced oil recovery that we need to put and once we put the secondary and tertiary recovery methods, technically we grow the reserves and production for the country”. Speaking on behalf of the bid winners, the Chairman of Vhelblerg, Bank Anthony Okoroafor thanked DPR for holding a transparent bid exercise.
“It was open to everybody, there was communication established with everybody and they did their own work very well”, he stated. He however urged DPR to support the winning firms by talking to IOCs to allow the operators use their facilities if it is the most effective options. Some other winners were Sigmund Oil Field, Emadeb Energy, Casiva Ltd, Duchess Energy and Duport Midstream.
The Department of Petroleum Resources (DPR), further stated that it had concluded arrangements to issue award letters to successful investors in the 2020 marginal field bid round programme.
In a statement signed by the Head, Public Affairs of the organisation, Mr. Paul Osu, it noted that the award ceremony has now been officially scheduled to hold on Monday, May 31, in Abuja.
The oil and gas industry regulator stressed that successful investors, who will be receiving their award letters are companies that have fully satisfied all requirements listed in the marginal field bid round guidelines, including full payment of signature bonuses within the specified time frame.
The process, which culminated in the presentation of award letters, commenced in June 2020 with 57 marginal oil fields on offer for investors with the objective of deepening indigenous participation in the oil and gas industry as well as adding to the country’s production and reserve.
The marginal field bid round programme, the DPR stated, is also geared to provide technical and financial partnerships for investors.
“The Department of Petroleum Resources will continue to provide transparent regulatory oversight for the oil and gas industry to enable business and create opportunities for investors,” the statement noted.
Recently, Director of the DPR stated that the country was expected to net $500 million from the signature bonuses on the fields, the first marginal field round since 2002.
Auwalu said DPR had narrowed the list of bidders to 161 and would mark the first first time Nigeria would allow companies to pay oilfield acquisition costs in naira.
Having received the expected revenue, the Minister of State for Petroleum Resources, Timipre Sylva, penultimate week revealed that the regulatory agency “rescued” Nigeria from a financial crisis by remitting the funds to the Federation Account Allocation Committee (FAAC) in April.
Sylva explained that since the DPR collected royalties on behalf of the federal government, it was able to fill the vacuum left by the NNPC in contributing to the federation account.
The minister, who did not mention the exact amount the DPR provided, said revenues from marginal field programmes were of use, when the nation was in dire need of funds to share among the federating units.
“I can’t say what the figure is, but the DPR has always contributed to the federation revenue, because they collect royalties, so they’ll continue to contribute.
“But as to filling the gap, it’ll not always be there, because NNPC has not said after not being able to contribute in May, it’ll stop entirely. NNPC has not announced it again. So, we cannot say for how long DPR is going to keep paying,” he said.
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