The Federal government has approved guidelines given to potential investors willing to participate in the 2020 Marginal Fields bid round, a development which is expected to help solve Nigeria’s current revenue challenges.
The timeline for the 2020 Marginal Field bid round, after kick off, is expected to take a maximum of six months, while bidding forms will be provided by the Department of Petroleum Resources (DPR), according to Africa Oil & Gas Report, an energy intelligence publication.
The detailed steps for the 2020 Marginal bid rounds include submission of application by interested companies, prequalification of interested companies, announcement of Pre-qualified companies, submission of detailed Technical and Commercial Bids by Prequalified companies, evaluation of Technical and Commercial Bids and announcement of winning bids.
The application process which is expected to give local players the best opportunity to participate in Nigeria’s energy sector shall attract non-refundable chargeable fees as follows, Application fee of N2 Million Naira per field, Bid Processing Fee of N3million per field, Data prying fee of $15,000 per field, Data Leasing fee of $25,000 per field, Competent Persons Report of $50,000 and $25,000 for Fields Specific Report.
All application fees and processing fees are expected to be paid into the Treasury Single Account (TSA) while Signature Bonuses are expected to be paid into the Federation Account.
Also, fees for data leasing, data prying, Competent Persons Report (CPR) and Field Specific Report should be paid into the National Data Repository (NDR) account for repayment.
For potential investors, there are at least 56 Marginal Fields located on land, swamp and shallow water terrains in the bid basket, including 11 fields, the licences for which were revoked in early April 2020.
These Marginal fields are discoveries made by oil majors that were undeveloped either because of distance from the existing production facility, low reserves (in view of the majors) or likely low production volumes as a result of flow assurance issues.
According to the approved guidelines, applicants must show evidence of technical and managerial capability and must also demonstrate the ability to fully meet the objective of undertaking expeditious and efficient development of a Marginal Field.
“Where there is little or no track record of petroleum operations, interested companies would be expected to demonstrate the ability to manage or develop in that direction in the short to medium term,” Africa Oil & Gas Report said.
An investor’s guide to Marginal Oil field acquisition prepared by the government says Nigeria has an estimated 2.3 billion barrels of crude oil reserves in over 183 fields classified as marginal however despite this potentials, marginal field still contribute poorly to Nigeria’s total production.
According to a report by the DPR, only 9 marginal fields are currently producing from the 30 fields awarded during the last bid rounds.
Nigeria has not also held marginal field bid rounds since 2003. Twenty-four fields were awarded to 32 companies, some of them two to a field, in 2003.
Recent decision to conduct a Marginal Field bid round is in line with the recent drop in oil prices which is hitting Nigeria hard, making a big dent in government revenues and threatening the viability of upstream projects.
Nigeria could lose more than $9billion as a result of the fall in oil prices, according to Goldman Sachs, a development which could plunge Nigeria into its second recession in six years and it’s third under President Muhammadu Buhari.
Source: Business Day