The
federal government through the Department of Petroleum Resources (DPR)
has set the guidelines for the marginal oil field bid round scheduled to
take place later this year or early 2018 and could potentially see
scores of investors jostling to acquire 46 oil acreages during the
exercise...
Of
the 46 acreages up grabs, it was however gathered that the DPR is
considering setting aside some of the oil blocks for discretionary award
to firms owned by Niger Delta indigenes, in order to sustain the
prevalent peace in the oil-rich region and give its citizens a sense of
ownership in Nigeria’s oil wealth.
Though
federal government under former President Olusegun Obasanjo initiated
efforts to enthrone open, transparent and competitive bid rounds in the
award of oil blocks, the Petroleum Act empowers the Minister of
Petroleum Resources to award oil acreages on a discretionary basis, a
process that was frequently abused by past military administrations.
According
to DPR sources, at least 25 of the marginal fields in the current bid
round are promising and if developed could produce 5,000 to 10,000
barrels per day of oil equivalent (bpoe).
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.
The
first marginal field to be awarded in the country was the Ogbelle field
allocated to the Niger Delta Petroleum Resources Limited in 1999 to
promote indigenous participation and build local capacity in the
upstream sector.
After
the Petroleum (Amendment) Decree No. 23 of 1996 was enacted to provide
the legal framework for the award of the oil acreages deemed “marginal”
by the IOCs, the guidelines for farming them out and operation of the
fields were developed in 2001 and 2003, following which 24 additional
fields were awarded to 31 companies.
The
24 fields and the 31 beneficiary companies included Platform Petroleum,
which was awarded the Asuokpu/Umutu field in OML 38, Prime Energy and
Sufolk Petroleum, which were awarded the Asaramatoru field in OML 11,
Bayelsa Oil (Atala field in OML 46), Excel E&P (Eremor field in OML
46), Walter Smith Petroman and Morris Petroleum (Ibigwe Field in OML
16), Independent Energy (Ofa field in OML 30), Millennium Oil (Oza field
in OML 11), and Network E&P (Qua Ibo field in OML 13).
Others
were Universal Energy (Stubb Creek field in OML 14), Associated Oil and
Gas and Dansaki Petroleum (Tom Shot Bank field in OML 14), Sahara
Energy and Africa Oil and Gas (Tsekelewu field in OML 40), Frontier Oil
(Uquo marginal gas field in OML 13), Guarantee Oil and Owena Oil (Ororo
field in OML 95), Sogenal Oil (Akepo field in OML 90), Bicta Energy
System (Ogedeh field in OML 90); Britania-U (Ajapa field in OML 90), and
Eurafic Energy (Dawes Island field in OML 54).
The
rest included Del-Sigma Limited (Ke field in OML 54), Goland Petroleum
(Oriri field in OML 88), Movido E&P (Ekeh field in OML 88),
Midwestern Oil and Gas and Suntrust (Umusadege field in OML 56), Pillar
Oil (Obodugwa/Obodeti field in OML 56), Energia Limited and Oando
(Umusati/Igbuku field in OML 56), and Chorus Energy
(Amoji/Matsogo/Igbolo field in OML 56).
The
Okwok and Ebok fields were awarded in 2006 and 2007 to Oriental Energy
to compensate the company for losing part of OML 115 to Equatorial
Guinea, following a boundary adjustment exercise between Nigeria and
Equatorial Guinea.
In
2010 Otakikpo and Ubima fields were also awarded to Green Energy
Limited and Allgrace Energy Limited, respectively, to conclude a
protracted award process that commenced in 2004.
But
of the 30 marginal fields awarded from 1999 to date, only nine fields
are producing, while 21 are at different stages of development.
The
companies producing from the nine oil acreages are Platform Petroleum,
Walter Smith Petroman and Morris Petroleum, Frontier Oil Limited,
Britania-U, Midwestern Oil and Gas and Suntrust, Pillar Oil, Energia
Limited and Oando, Oriental Energy, and Niger Delta Petroleum Resources
Limited.
Under
the guidelines seen by THISDAY for the current marginal field bid
round, interested investors will be required to pay $50,000 each for a
Competent Persons Report (CPR).
The
CPR will require bidders to provide details of their shareholding
structure, names of their directors, track record in the oil and gas
sector, audited financial statements, partnership and/or collaboration
with indigenous firms, and financial resources to bid and pay for the
oil acreages.
After
the CPR stage, investors will also pay $15,000 each as data mining fees
to enable them gain access to the relevant data on the acreages that
will be placed on offer.
At
this stage of the process, investors will be availed information on the
size of the fields, seismic surveys, and past appraisals conducted by
IOCs, among other relevant information.
After
the data mining stage, the DPR will commence the technical evaluation
of the bids submitted by the firms, during which several investors which
fail to meet the criteria will be dropped.
Investors
that have passed the technical evaluation process will then be invited
to submit their commercial bids in a process that will be open to the
public.
Expectedly,
the oil acreages will go to the highest bidders who will be given a
timeline within which to pay for the oil acreages.
Where
a bidder fails to meet the payment terms, the second bidder (reserve
bidder) will be invited by the DPR to take up the block.
THISDAY
also gathered from an official of the DPR who preferred not to be
named, that successful bidders in the forthcoming exercise will be
expected to confirm their willingness to pay $300,000 as signature
bonus.
He also disclosed that the federal government was expecting to realise $200 million-$300 million from the bid round.
He
added that the indigenous companies, which must have “at least 51 per
cent of the beneficiary interest in the company, must be registered
solely for exploration and production business”.
“This
is to avoid the mistakes of the past where companies with no track
record in E&P operations were forced into marriages even when they
were not compatible,” he said.
“The
signature bonus shall be paid within 90 days of the date of the award.
Any successful company that fails to pay the signature bonus at the
expiration of the 90 days will be issued a revocation notice, which
shall last for 30 days.
“If
the company still fails to pay at the expiration of the 30 days, the
allocation will be automatically revoked and it will be offered to the
bidder that came second in the bid round,” the official explained.
It
was also gathered that the bidders will be expected to submit their
Nigerian content plan to demonstrate the commitment of the company in
local manpower development and patronage of indigenous service
providers.
A
senior official in the Ministry of Petroleum Resources also explained
that the reason the DPR was considering setting aside some of the oil
acreages for discretionary awards stemmed from the need to pave the path
for ownership of oil assets by Niger Delta companies.
“No
decision has been made on how many marginal fields will be set aside
for discretionary awards, but the intention is to allow individuals from
the Niger Delta to own them.
“It
is not being done for political reasons, but to pave the path for
ownership by Niger Delta individuals. The intention is to ensure that
people from the region own the oil assets, even if it means holding a
separate bid round for Niger Delta-owned companies,” he said.
Though
the administration of former President Obasanjo significantly curbed
discretionary allocation of oil blocks and introduced the open bid
rounds, Oil Prospecting Lease (OPL) 291 was awarded to Starcrest Nigeria
Energy Limited on a discretionary basis in the bid round of May 2006
bid, after other bidders, journalists and civil society groups had left
the venue of the licensing auction.
The
award of OPL 291 to Starcrest, with a $55 million signature bonus,
became public after Addax Petroleum, in a regulatory filing, said it had
agreed to pay the $55 million signature bonus in full and an additional
$35 million to Starcrest for a 72.5 per cent stake in the block to foot
Starcrest’s exploration and development costs.
The
transaction fuelled a public outcry that forced the federal government
to suspend the then DPR director, Mr. Tony Chukwueke, who was also an
adviser to the Minister of State for Petroleum at the time, Dr. Edmund
Daukoru.
No comments: