DPR targets $500m from marginal oilfield sale

DPR targets $500m from marginal oilfield sale

The Department of Petroleum Resources (DPR) says it plans to generate about $500 million from the sale of the ongoing marginal field bid round.

Aside this, for the first time in the nation’s history, the successful bidders would be allowed to pay the acquisition cost of the oilfields in naira.

With this disclosure, funding of Nigeria’s 2021 budget of N13.6 trillion may have gotten a soft landing as part of the $500 million revenue from oilfield sale would provide a soft landing for the budget implementation.

Sarki Auwalu, director of the DPR, disclosed this at the weekend during a live interview on Arise TV Flagship programme-The Morning Show.

Sarki Auwalu

Auwalu said the $500 million revenue target will cover proceeds from application/ processing fees, data buying/leasing, signature bonuses, among other related statutory charges.

“What we did internally is to look at the competent person reports and objectively estimate the average signature bonus on a field. We estimate to have not less than $500 million, which is on the conservative side.

“We are avoiding any third-party interference since government really believes in us and we believe the investors are having confidence in the process,” he said, adding that there would be no discretionary award.

According to the DPR guidelines on the 2020 oil bid round exercise, and payment by interested bidders shall attract non-refundable chargeable fees as follows, Application fee of N2 million per field, Bid Processing Fee of N3 million 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. With the above, interested bidders are expected to pay a total of $115,000 in statutory fees and another N5 million in local currency.

At the official exchange rate of $360/$1, the 57 oil fields on offer gives N2,364,800,000 including the N5 million payment.

The agency added that 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.

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.

The Federal Government, through the DPR, had announced on June 1, 2020 the start of the 2020 Marginal Field Bid Round, with 57 fields available for indigenous companies and investors interested in participating in the exploration and production business in Nigeria.

The agency said last month that 161 companies had been shortlisted to advance to the final stage of the bid round.

“When we started the marginal fields bid round, we reviewed the first and learnt from the experience. We had 24 fields awarded in 2003; unfortunately, only 13 out of the 24 seems to be producing,” Auwalu said.

He said there were over 630 applicants, out of which about 500 prequalified.

Source: The Sun