DPR releases guidelines for marginal fields’ licensing rounds

NNPC (1)The Department of Petroleum Resources (DPR) has released the guidelines for farm out and operation of marginal fields in the country.

The Director of DPR, George Osahon, told stakeholders at a road show in Lagos yesterday as part of its 2013 marginal field awards exercise, that interested bidders must demonstrate technical ability with regards to evaluation and development of assets.

Osahon added that there must be evidence of relationship with a technical partner that has adequate capacity and financial resources to operate the field. “In your application, you must state clearly where your finance will come from”.

He added that all duly registered Nigerian companies must have at least 51 per cent of the beneficiary interest owned by Nigerian citizens. “The indigenous company shall be substantially Nigerian and shall be registered solely for exploration and production business”.

Osahon noted that bidders must confirm their willingness to pay a signature bonus of $300,000 if successful.

He stated: “There is consideration for local community involvement in the operation of the company as stakeholder in the business as well as commitment to social projects for the socio- economic development of the communities.  There is also provision for local content in terms of the commitment of the company tothe training and growth of indigenous capability, manpower and local input in the provision of goods and services to the industry shall be indicated.”.

He disclosed that the overall process is not expected to take longer than six months, from date of announcement to contract signing with the leaseholders. “Adequate time will be allowed for data prying and submission of applications”, he said.

The agency said in a document tagged: “Guidelines For Farmout and Operation of Marginal Fields 2013”, that a selection committee has been set up with membership from the DPR, representatives of the leaseholders including Nigerian National Petroleum Corporation and the operator of the lease as well as External Financial Advisers.

It stated: “Details of the requirement for submission is contained in a prescribed form to be downloaded from the DPR website and no applicant may add any document or attachment to the submission unless it is so stated on the form.

 

“In addition to detailed technical work programmes, careful evaluation of the commercial proposals submitted by bidders will be carried out gain insight into the applicants understanding of the intricacies of field development economics and the selection of options thatwill lead to a profitable venture.This shall be submitted only at the stage of field-specific bid.

“The2013Marginal Fields Licensing Round willbe based on competitive participation by interested companies and entities. The Selection committee prior to making recommendations will screen the application, together with requisite information and documentation. Only companies with the highest scores will be selected for the award of the fields. The overall evaluation and selection process will be guided by the criteria specified in the guidelines in addition to other information to be considered necessary by bidders.

“On the grant of a Marginal field, the Signature Bonus shall be paid within the period of 90 days from the date of award. If a company fails to pay the required Signature Bonus at the expiration of the 90-day period, a revocation notice, which shall last 30 days shall be given If the company is then unable to pay up within the 30 days of the revocation notice, the allocation shall be revoked without further notice.

“In reaching an agreement on terms and conditions of the farm-out arrangement, the parties must as of necessity agree on equitable consideration and structure of same.

“To facilitate such a negotiation, it is important for each party to determine on its own the worth of the farm-out interest (taking into account the status of the field, that is, whether it is in the appraisal or development phase of its life cycle as such consideration affects the value and associated risks).

“However, in the event that the parties fail to reach an agreement, the minister shall then adjudicate in the matter”.

The document noted that the farmee is expected to provide a safety and environment programme, which shall be in accordance with existing regulations, guidelines and standards.

 

[The Guardian]

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