Exactly 12 years after the federal government offered 24 marginal oil fields to Nigerian independent companies, the government has kick-started a second licensing round aimed at deepening the participation of indigenous oil companies in the upstream sector of the oil and gas industry.
The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, who unveiled the plan yesterday in Abuja during a press briefing, said it was designed to increase exploration and production activities in the oil and gas sector to the benefit of Nigerians and the economy.
The minister said a total of 31 fields would be on offer with 16 of them located onshore, while the remaining 15 are in the continental shelf.
She promised that the federal government would be committed to transparency in the bid process and encouraged companies interested in the assets to form consortia that would enable them to leverage on each other’s strengths.
“Over the next two weeks, the Department of Petroleum Resources (DPR) will undertake a road show to different parts of the country about the programme. This will be followed by a process of three-and-a-half months of competitive bidding, in line with the federal government’s commitment to openness and transparency in the conduct of business activities in the country,” she said.
Giving an update on the last marginal fields bid round, which held in 2001, the minister disclosed that of the 24 fields that were allocated to 31 indigenous oil companies in that exercise, eight were already producing while the others were at various stages of development.
She noted that the marginal field operators who currently account for about one percent of the nation’s oil output had also recorded huge discoveries, adding in excess of 100 million barrels to the nation’s reserve base.
The minister said of the eight assets that had so far been divested by the international oil companies (IOCs), at least four are held by active marginal field operators, who have continued to demonstrate remarkable technical ability in operating significantly larger assets.
“In their operations, the companies have addressed corporate social responsibility as a critical element, by providing for stakeholder participation as part of their success factors.
“In addition, their development strategy is in line with the nation’s gas flare policy and global environmental guidelines on green house emissions, by ensuring full utilisation of their associated gas.
“Indeed, one of them has established a modular refinery for diesel production which is the first of its kind in the country,” she added.
The minister explained that the federal government was encouraged by the modest achievements of the marginal field operators, in line with the objectives of the local content policy, to kick off this marginal field licensing round.
On the proposed sale of the refineries, Alison-Madueke reiterated government’s stance to move away from managing major infrastructure, adding that government was going ahead with the original plan to rehabilitate the refineries so as to be able to get a premium price from their sale.
She stated that adequate room had been made in the privatisation timetable for engagement with all stakeholders to resolve all labour issues to ensure a win-win situation for all.
She also said the federal government would rehabilitate the country’s four refineries, with a combined installed refining capacity of 445,000 barrels per day (bpd), before selling them off to private investors next year.
“We are moving for the privatisation of the refineries in the first quarter of 2014. At this point in time, the negotiations round for the Turnaround Maintenance (TAM) of the Port Harcourt refinery is now completed.
“We started the TAM with the original contractors who built the Port Harcourt refinery and this was with the intent of ensuring that the right people carried out this TAM once and for all.
“Unfortunately, the actual negotiations have been long drawn out; one, because of the prices they came in with at the get go,” she explained.
She added: “It has taken a number of months of very aggressive robust negotiations to get to the point with Port Harcourt refinery where we can actually begin to implement the work. So Port Harcourt is now on the move in terms of TAM and once that is close to completion, Kaduna and then Warri will follow suit.
“The intent was to ensure that government does not sell the refineries in the worst possible state to ensure that we get some commercial value for these refineries which are still, I think, in a very decent shape but need a lot of refurbishment and a lot of update in terms of the core technology that they use.
“That is the situation right now but we will kick off the privatisation round. We will have all the discussions and negotiations with the unions in that period of time, as well ensure that we are all working together to make this happen and ensure that it is a win-win situation for all parties at the end of the day.”
On the alleged reports linking the Nigerian National Petroleum Corporation (NNPC) and Swiss-based oil dealers to underhand deals, the minister said: “I think that those who were accused by this purported organisation in Switzerland have already taken up legal counsel and are already addressing the issue through the court because of how strongly they felt about being wrongly accused.
“So since it is in the court, it’s another area that I don’t think I should be making pronouncements on right here, except to say that as the Minister of Petroleum Resources, we are completely unaware of such deals. I am sure the legal system will make that very clear very shortly.”