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Nigerian petroluem regulator bars debtors from bidding for marginal oil fields



Africa Oil & Gas

OIL firms indebted to the Nigerian Government will not be allowed to participate in the newly launched bid round for marginal oilfields as oil firms, the Department of Petroleum Resources, (DPR) has revealed.

Sarki Auwalu, Director of the DPR, in a statement, said that the 57 oil fields which are listed for bidding were small oil fields that major oil companies considered unprofitable and auctioned to indigenous companies under a competitive bidding round.

“We are so impressed by the responses so far. For so long the industry has been stagnant to increase its reserves and one of the strategies to increase our reserves is through this exercise,” he said.

A marginal field is an oil field that has been discovered and has been left unattended for a period of not less than 10 years, from the date of first discovery or such field as the President determines.

The fields on offer are located on land, swamp and shallow offshore terrains while the present bid rounds are expected to last for 10 weeks. The DPS said the process would be conducted electronically.

The last marginal bid rounds were undertaken in 2003.

“Pre-qualification will be opened to all indigenous companies that are duly registered to carry out petroleum exploration and production operations in Nigeria,” Auwalu stated.

“Companies, including their promoters, that are indebted to the government will not be pre-qualified. Also, companies and their promoters that currently have assets that are not being operated in a business-like manner will not be pre-qualified,” he added.

The applicable fees per field are N500,000 for registration,  N2 million for application, N3 million for the bid processing, $15,000 for data prying, $25,000 for data leasing, $50,000 for competent persons’ report, and $25,000 for a field-specific report.

From the expected bid round, the DPR is likely to generate N3.17 billion from the payment of fees for the 57 marginal fields on offer, according to a report.

The regulatory agency said the pre-qualification exercise would be done on objective criteria, guided by rules of general application.

In another development, the DPR’s efforts to commercialise the gas that is currently burned at its wells as waste so that it can be exported or used for power production has been delayed by at least six weeks due to COVID-19 outbreak.

Nigeria’s gas flare commercialisation programme was approved in 2016, and the DPR held bidding round for companies wanting to bid on the opportunity to commercialise 96 flare points in February.

“What is holding the programme is COVID-19,” Auwalu said, as he disclosed that the bidders need access to the flare points…, “they have to go and see it physically.”

“We had to officially extend the programme by six weeks,” he said.

Nigeria is one of the top ten gas-flaring countries in the world; it flared some 7.4 billion cubic feet in 2018, according to accounting firm PwC.

The country estimates that it loses $1 billion in revenue yearly due to flaring, which contributes to extreme environmental pollution in the Niger Delta region.

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