Marginal oil fields yield N200 billion for FG
The federal government of Nigeria has concluded the 2020–2021 marginal oil field bid rounds, making about N200b in revenue.
What’s a marginal oil field?
Marginal oil fields, in Nigeria, include those that have production potential and declared reserves but are regarded as marginal for various reasons. They were started as a federal government program in the 1990s with the aim of giving Nigerian indigenous oil and gas businesses the chance to take a more active role in the exploration and production section of the petroleum sector. More than a decade since the last bid rounds, Nigeria opened 57 fields for bidding in June 2020, and set May 1, 2022, for the awarding of licenses to winners.
How much did the fields go for?
With a bid participation fee of $125,000 per company, and a signature bonus of between $5m and $20m per field, the Department of Petroleum Resources (DPR) had estimated the total value of the 57 marginal oil fields at not less than $500m. The costs covered in the fee include N500,000 for registration; N2m for applications per field; N3m for processing bids; $15 000 for data prying; $25 000 for data leasing; $50 000 for competent person reports; and $25 000 for field-specific reports.
How much did the government disclose as proceeds of the bid?
The FG stated on Saturday that Petroleum Prospecting Licences for the 2022 bid round’s successful investors in the 57 marginal oil fields would be issued on Tuesday(yesterday). Gbenga Komolafe, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission, had stated in January that the 2020 bid rounds raised about N174b, as 33 recipients failed to make payment within the allotted 45-day window.
However, it was reported that new investors had made payments. The bid rounds conclusion (and license issuance) is predicted to lead to an increase in local capacity and the optimization of oil production and has been hailed by experts and industry players, especially at a time Nigeria is battling dwindling production and revenue.