Nigeria to open up about 116 marginal fields to indigenous companies

Aug 29, 2001 02:00 AM

Indigenous oil prospecting companies itching for a piece of the action in the Nigerian upstream sector may no longer remain on the sideline, as indications emerged that the Federal Government will next month open up about 116 marginal fields to them. In fact, September 3, 2001 was fixed for the take-off of the bidding exercise, described as a remarkable improvement on the guidelines issued early this year by the government.
The bid will allow the indigenous oil companies to actively participate in the upstream oil exploration and production activities. To facilitate the scheme, new guidelines are to be released. The guidelines have removed certain hurdles inherent in the ones issued by the Special Adviser on Petroleum and Energy Matters to the President, Dr. Rilwanu Lukman early in the year.

About 116 marginal fields identified as at December 1999 and located within the lease-holds of the multi-national oil companies in the Niger Delta are expected to be allocated to the prospective indigenous oil field bidders.
Sources at the NNPC hinted that the guidelines for the granting of oil fields would be unfolded as the invitation for the bids are being announced. This will culminate in approval of the allocation of the marginal fields designed to gainfully engage competent Nigerians in the oil and gas prospecting sector.
"The initiative would provide an opportunity for the development of indigenous companies which could in turn lead into operations in the less conventional terrain", the NNPC source said. It added that allowing the local companies to develop the marginal field would translate into long-term stability in the industry.

Lukman had stated early this year that a three-phase process which is expected to last 12 months had been adopted for the allocation of marginal fields to interested entrepreneurs in Nigeria. These include: field specific bid in two separately sealed envelopes for technical and development plan, commercial issues and negotiation of detailed farm-out terms (by operators) with DPR having adjudicatory role as necessary.
Other requirements disclosed then by Lukman were:
-- background and experience in exploration and production at a sufficiently high level;
-- Niger Delta representation and federal character representatives. However, operators believed that these criteria were not realistic to allow indigenous participation in the industry.

The Special Assistant to the President on Petroleum, Mr. Funso Kupolokun had told in May this year that following input from the oil industry operators, the guidelines for the allocation of marginal fields were being fine-tuned in readiness for calls for fresh bids before the third quarter of the year.
Kupolokun stated that because government wanted to encourage Nigerians to be involved in this sector, the guidelines would be to enable prospective explorers play an active role in the scheme. The General Manager, Group Public Affairs of NNPC, Mr. Ndu Ughamadu, had earlier advised indigenous firms to develop the capacity needed for effective in-road into the oil terrain.
Ughamadu observed that the role of NNPC in developing such fields is enormous especially in the aspects of negotiations and operation for maximum benefits. Marginal fields are those oil and gas fields that have been discerned but not developed due to certain economic factors, especially the size of the fields. Such fields are considered uneconomical to produce by the lease holders.

Source: The Guardian
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