FG rakes in over N2tn from marginal oil fields sale

Zainab-Ahmed (c) Businessday

Federal Government may have raked at least N2tn from the 2020/2021 marginal oil field bid rounds, according to findings by our correspondent.

In the Nigerian context, marginal fields include fields with reported reserves and production potential, which are however deemed marginal for a variety of reasons. Notably, marginal fields exist under current Oil Mining Leases.

After 18 years of the last bid rounds, Nigeria through the defunct Department of Petroleum Resources, put up 57 onshore, swamp, and shallow offshore terrains fields for bidding, and had set May 1, 2022 for the issuance of licences to winners.

However, the licences were not issued due to delays in payments of the fees and bonuses by the winners of the oil fields, unconfirmed sources close to the situation said.

Findings showed that each of the awardees paid a total of N48bn (fees and bonuses) to gain access the licence, resulting in combined revenue of over N2tr for the Federal Government.

A breakdown of the N48bn include: N500, 000 registration fee, N2m application per field, N3m bid processing fee, data prying fee of $15, 000 per field, data leasing fee of $25, 000 per field, competent persons report fee of $50, 000 per field, and $25, 000 per field for field specific report.

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This brings the total payment to approximately N48bn per awardees.

The Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, had in January said about N174bn was raised from the 2020 bid rounds as about 33 awardees failed to make payment within the specified 45 days window.

It was however learnt that new investors later came in and paid for the fields.

In the past 21 years, about 87 of such fields have been developed, including the 57 whose sales are being finalised by the Federal Government.

On Saturday, the NUPRC said in a statement that it would on Tuesday (today) issue Petroleum Prospecting Licences to successful awardees of the fields.

The development came over one year after the licences ought to have been issued.

Nigeria is currently facing low crude oil production as a result of low investments in the upstream, among other issues.

An oil and gas expert, Bala Zaka, said, “The licence issuance has already been delayed for over one year. If the licences had been issued earlier, the winners would have started work; this would have added to the dwindling oil and gas production of the country. Some of these awardees would have also taken loans.

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And don’t forget, Nigeria’s currency has witnessed serious devaluation and, as such, most of them may not be able to afford paying up. Some of them would have even paid back the loans, while some would have moved on to other businesses.”

He, however, advised the eventual winners not to delay exploration.

The Group Chairman/CEO • International Energy Services Limited, Dr. Diran Fawibe, said NUPRC should make sure the processes were properly streamlined to enable the licensees to begin work immediately.

He said, “The Federal Government needs to deepen their engagement with the authority, and make sure all the processes are streamlined, and the operators will not have any problem. Once they are given their licences, we expect them to go into operations quickly. The wants to improve the oil production through the marginal fields. As you know, our production figure has been lagging, and we don’t meet OPEC quota.

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“The is now looking to the independent and marginal field operators to improve their operations and increase production level.”

If the oil companies are not making investments, we expect the marginal field operators to put their acts together and fund the development of the fields. One hopes it won’t be that they just take the permits and sit on them because it will be a big tragedy for the country. It is better late than never. They operators should go full blast and within a short time, about 12-18 months, some of the streams should come on stage and add to our crude oil production.”

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