Speaking yesterday to THISDAY in Lagos at the sidelines of a road-show to kick off a fresh marginal fields bid round, the Director of the Department of Petroleum Resources (DPR), Mr. George Osahon, also stated that contrary to the practice in 2001 when the federal government merged two or three indigenous companies and gave them marginal fields, the companies would be encouraged to merge on their own to avoid bringing together strange bedfellows.
Osahon noted that even though only eight out of the 24 marginal fields given out in 2001 were currently producing oil, the government had no plans to withdraw the fields from the owners.
“When companies are operating and they discover fields, if they don’t operate for 10 years, the President can take the fields. But it is not that if you give marginal fields to Nigerian companies, you then take it after 10 years,” he said.
On what gave the government the confidence to organise another marginal field when the performance of the first bid round was only 30 per cent, contributing only one per cent to the country’s daily production, Osahon said the government was going into another bid round on the conviction of what had happened so far.
“One per cent does not make sense to you because you don’t understand our industry. If you understand our industry, you will know what one per cent is and how much those companies have struggled to bring out that one per cent,” he said.
“Is it better to leave those fields without giving them out to people or to give to them and have another 30 per cent production? Are we looking at the cup half-full or half-empty,” Osahon asked.
Osahon said the companies would also go and merge on their own to avoid the forced merger carried out at the first bid round and which led to the inability of the companies to work together to put their fields into production.
He acknowledged that some of the local operators that were forcefully merged by the government at the previous exercise were not on speaking terms, let alone working together to bring their fields to production.
“What government did initially was to combine two or three companies and give them an asset. What we are saying now is that the government will not combine anybody. Let them go and sort out themselves and form consortia,” Osahon said.
He stated that as part of the government’s efforts to minimise the funding challenges faced by the marginal field operators, Osahon said the DPR would bring in the African Development Bank and African Finance Corporation in the new bid round, adding that prospective investors have also been directed to disclose their source of funding to the government.
“They (investors) should give us line of sight to their source of funding. That is the most critical. AFC and ADB are on the committee because they are the people, who understand funding and financing,” he said.
A total of 31 marginal fields are on offer with 16 of them located onshore, while the remaining 15 are in the continental shelf.