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Tag: DPR

  • DPR remits $1.03 billion in royalties, legacy debts to FG

    DPR remits $1.03 billion in royalties, legacy debts to FG

    The Department of Petroleum Resources (DPR) has said it remitted 1.03 billion dollars to the Federation Account from oil and gas royalties and legacy debts.

    DPR’s Director, Mr Sarki Auwalu made this known in a statement issued on Tuesday in Lagos.

    Auwalu said this was achieved through robust regulatory reforms that had been put in place to ensure timely and efficient revenue collection drive.

    He said the department collects oil and gas royalties, which represent the proportional value of oil and gas production and flare gas penalties.

    He further stated that the DPR, as a revenue collection agency of government, will continue to use its regulatory instruments to enhance revenue collection for the Federal Government.

    “It also collects concession rentals paid for grant of oil and gas acreages and miscellaneous oil revenues comprising statutory application fees, licences, and permit fees.

    “Such revenues are generated from licenses, permits and approvals to enable businesses and create opportunities for investors in the oil and gas sector,” the director said.

    Auwalu explained that it was not part of DPR’s functions to advise government against borrowing from global financial institutions.

    According to him, there are agencies that are statutorily empowered to do that.

  • Marginal oil fields: Another goldmine ebbing away

    Marginal oil fields: Another goldmine ebbing away

    By Kolade Omotoso

    For so long as Nigeria had crude oil as the mainstay of her economy, how well has it served Nigeria since discovery? Not so well as corruption and sabotage have seen the country and its citizens wallowing in abject poverty, infrastructural deficit and wanton corruption.

    In a bid to harness the full potentials of the natural resources Nigeria is adequately blessed with, a non-profit policy institute, the Nigeria Natural Resource Charter (NNRC) was established. This organization saddles itself with the responsibility of effectively managing natural resources for the good of all and sundry. To achieve this, the organization prescribed twelve (12) precepts which if put into use, would help in developing the natural assets latent underground to generate wealth and visible development for the teeming populace. The 12 Precepts address the issues of legal framework, transparency, licensing, taxation, local impacts, state-owned enterprises, investment, growth, public spending, private sector, extractive companies and the roles of the international community.

    Precept 1 focuses on strategy, legal framework and institutions. It seeks to ensure that resource management should secure the greatest benefit for citizens through an inclusive and comprehensive national strategy.

    Precept 3 which talks about the government encouraging efficient exploration and production operations applies here. It is expected that the government being an unbiased umpire should allocate these marginal oil fields to local oil companies that have shown capacity to develop them to productive capacity. Little has changed from the last benchmarking report of 2017 with respect to exploration, licensing and monitoring operations. Despite having marked improvements in the areas of collection and disclosure of data of interested parties, legislation has been a major impediment. The refusal of the President to accent to the PIB which houses the Petroleum Industry Administrative Bill (PIAB) means the President who doubles as the incumbent Minister of Petroleum still possesses discretionary powers to award licenses to whosoever he deems fit. This singular action cannot produce the level of competition needed to make the most of the marginal fields auction which is getting competent local companies to get licenses that would further develop our local oil industries. It is also worth noting that no bid was held during the review period. Without appropriate legislation backed regulation, future auction could still be abused.

    Theoretically, marginal oil fields are oil fields that are considered not commercially viable enough for the huge oil companies to invest in but according to the Petroleum Amendment Act, marginal fields are fields where oil discoveries have been made but left unattended to for a period of 10 years from the date of discovery. To this end, there are several fields that have been declared marginal, many of them unallocated.

    Marginal fields auction is a bidding exercise carried out by the Department of Petroleum Resources (DPR) on behalf of the government. The exercise involves only indigenous oil companies as the marginal oil fields are designed to help the indigenous oil companies grow considering the fact that they do not have the wherewithal to rub shoulders with the multinationals when it comes to full blown oil exploration in the country. The marginal oil fields comes as a due compensation which gives them a sense of belonging.

    The last marginal oil field auction took place in 2003 where 24 fields were awarded to 32 companies and that was 18 years ago which means another exercise is long overdue. The issue worth musing over is how well those companies fared on the marginal oil field, the idea of them taking over the field is to develop it to production capacity which would in turn generate revenue for the government but reports have it that very few of those fields were even developed as many were left unattended to.

    Another issue with the acquisition of these fields which are meant to be a playground for local oil players is the fact that some indigenous companies would go into the auction not with the intention of winning to develop the fields but to win and then sell to foreign investors. In short, they are only acting as proxies for their own inordinate interests.

    Now that the DPR is gearing up for another auction with 56 marginal fields from land, swamp and shallow water terrains to choose from, the government through its governing agency must do things differently to achieve optimum results. Crude oil is no longer the expensive necessity it used to be in the global market, it is now a dispensable luxury that consumers have started finding a way around. To this end, the government must make the most of opportunities to maximize revenue from this particular natural resource and that is by ensuring a thorough bidding process which compels the winner to develop the fields.

    The usual practice of a window period of 10 years before declaring a marginal field dormant and then revoking the license before putting it up for another auction should be discarded. It should not take a decade to gauge the seriousness of an investor, that is too long a period to wait seeing the unstable nature of the price of crude oil in the global market. It is a known fact that the essence of the marginal fields auction is to strengthen local content by encouraging local players but stringent measures should be put in place to ensure that only serious players are allowed on that field.

    Furthermore, to make the most from our marginal oil fields, we need to whittle down the effect of politics. Those fields are for serious and interested investors not to curry or return political favours .

    The government should as a matter of urgent importance adopt the recommendations of the BER as it was carried out by people seasoned experts and people of impeccable character since the government cannot continue to do the same thing and expect different results. If they must achieve a better result with the marginal fields auction, things must be done differently.

    The government agency in charge of organizing the auction, the Department of Petroleum Resources (DPR) has called for bids and up for grabs and allocation are 57 marginal oil fields. The DPR has lined up several statutory payments amounting to 115,000 dollars and 5million Naira respectively. All these payments are to be paid before the bidding and they are non-refundable. While all these payments are not out of place as it would weed out the weak and unserious local investors. When the stakes are high, only the strong makes a claim.

    The auction is good but it could be better if the issues militating against a successful auction are adequately addressed. With the Covid-19 pandemic that has affected global oil prices and consequently, the nation’s economy, the country is being forced into a sale of her assets to raise revenue. This could be counterproductive as prospective buyers could sense the desperation and under-price the marginal oil fields. A desperate government in dire need of funds might be forced to settle for a knockdown price.

    Another issue is the delayed passage of the PIB. In recent days, there seems to have been progress with the passage of the PIB as a draft seems to have moved from the Executive to the legislature. This is definitely a leap forward but would the Marginal Fields Auction wait for the passage and signing of the bill into law before the auction is concluded? If the auction goes ahead under the current terms, the President and Minister of Petroleum, which in this case is the person of President Buhari, would still be wielding enormous discretionary powers and the marginal fields might just be falling into the hands of people not competent enough to develop it.

    With the Covid pandemic and the delayed passage of the PIB, this might just not be a good time to have another round of marginal oil fields auction.

     

    Kolade Omotoso is a versatile writer and a public affairs analyst.

  • DPR moves on to next phase of 57 marginal oilfields bid rounds

    DPR moves on to next phase of 57 marginal oilfields bid rounds

    From receiving applications, the Department of Petroleum Resources (DPR) said the stage is now set to move on to the next stage of the of 2020 marginal oilfields bid rounds, which is the phase to do pre-qualification for the bidders.

    The Director of DPR, Mr Auwalu Sarki, while speaking on Tuesday in a television programme monitored in Lagos, disclosed that over 600 companies have applied to be prequalified for the ongoing bid rounds of 57 marginal oilfields in the country.

    Sarki said Nigeria last conducted marginal field bid rounds in 2003, stressing that the ongoing exercise had attracted widespread interest because of the transparent and credible procedures put in place by the agency.

    He said: “First I will say that we have really witnessed an increase in bidders after the extension of the deadline to June 21. There has been almost 30 per cent increase in the participation.

    “If you are making a bid or auctioning any oil field, you need to get 10 people per field really going after the field. We have 57 fields and we have over 600 companies. So we can say that we are celebrating success so far.

    “After the extension, we are moving according to schedule and now we are in the phase where we do pre-qualification for the bidders to apply. Everything is going perfectly.”

    According to him, this is good news to Nigeria and Nigerians because it shows that the country is ready for business and that there are credible companies who are interested in investing in the country.

    Sarki also disclosed that strategic programmes have been put in place by the DPR to mitigate the impact of a second wave of COVID-19 pandemic on Nigeria’s oil and gas industry.

    He said part of the strategy was to reduce the number of workers on offshore locations and construction sites, encourage decontamination, testing and working with health agencies, especially the Nigeria Centre for Disease Control.

    The DPR director said the agency would continue to ensure that companies are COVID-19 compliant and adhere to the 14-day quarantine protocols for workers.

    Sarki said for the industry to survive and be taken to the next level, stakeholders must devise ways to deal with the triple challenges posed by the coronavirus, fall in oil prices and supply glut.

    He said: “We have outlined survival kits post-COVID-19 which involves four key strategies.

    “These include rationalisation of portfolios, strategic partnerships among Nigerian companies, new business opportunities using technology to get it done and cost control and management to see how best we can strive to take the nation to the next level.

    “Then, expectations are four: Innovation and resilience, partnership and collaboration as well as industry growth and business development.

    “This is what we are sending in the message to the entire industry because we need each other to really awaken the giant in this country and make it an investors’ haven”.

    A marginal field is any field that has reserves booked and reported annually to the DPR and has remained unproduced for a period of over 10 years.

  • FG maintains silence as controversies trail 2020 marginal oil fields bid rounds

    FG maintains silence as controversies trail 2020 marginal oil fields bid rounds

    The federal government has so far maintained deafening silence, failing to address issues that have propped up since the Department of Petroleum Resources (DPR) announced the commencement of the 2020 marginal oil fields bid rounds.

    TheNewsGuru.com (TNG) reports the flag-off of the 2020 marginal oil fields bid rounds comes amidst the Nigeria’s poor financial situation, which has made the implementation of the 2020 budget a Herculean task for the President Muhammadu Buhari’s government with capital and recurrent expenditures already slashed.

    Prior to the announcement, stakeholders in the oil and gas industry have consistently urged the FG to conduct an oil bid round for the purpose of raising revenue to fund some of its critical projects.

    For the 2020 oil bid round exercise, DPR announced that a total of 57 fields located on land, swamp and shallow offshore terrains are on offer. But the implementing agency announced that the bid round exercise is open to indigenous companies and investors interested in participating in exploration and production business in Nigeria.

    Marginal fields: Itsekiri people decry alleged marginalisation in bidding process

    Meanwhile, the Itsekiri ethnic nationality in Delta State has decried what it called marginalization in the current bidding process for the 57 Marginal Fields by the DPR.

    They expressed their grievance in Ode-Ugborodo, Escravos, Warri South-West Local Government Area (LGA), of Delta, in a statement, after a peaceful protest on Monday.

    They tagged the protest “Movement for the Development of Itsekiri Oil and Gas Producing Communities’ (MDIOGPC)”.

    The statement was issued by the convener of the protest, Mr Isaac Botosan.

    The group threatened to cripple operations of the Oil and Gas companies operating in their homeland, if the Federal Government refused to halt the current biding process of the 57 marginal fields, and subsequently initiate new modalities.

    The protesters held placards with different inscriptions like: “We need our share of the marginal fields in our locality, DPR take note,” and “Competent companies owned by Itsekiris must be given first right of refusal”.

    Botosan in the statement, condemned the alleged protracted marginalisation of the Itsekiri nation, particularly in the areas of project execution, employment opportunities, infrastructure development, among others; and urged government to address the issues.

    He also urged the Federal Government to initiate new modalities where competent companies owned by Itsekiri indigenous people would be given “right of first refusal” on Fields in their homeland before considering outsiders.

    “We can no longer continue to sit and watch non-indigenes being offered Oil Mining Licenses in our homeland when we have capable Itsekiri people whose firms are qualified, but repeatedly denied such licenses,” Botosan said.

    According to him, the Itsekiri, as a law abiding ethnic nationality, committed to the sustainable peace, growth and development of the Nigerian project, understands perfectly the effect of the COVID-19 on the economy.

    “We are equally not unmindful of the teething security challenges the Federal Government is confronting headlong across the country, especially in the North East.

    “But, we are, however, constrained to ventilate our frustration regarding the brazen and worsening marginalisation, staring at our face daily by those in charge of managing affairs in the Oil and Gas Sector.

    “The marginalisation is clearly evident in a manner that the Multi-Billion Dollar Gas Revolution Industrial Park Project in Ogidigben and Deepsea Port in Warri South-West LGA, have been abandoned.

    “The age-long Omadino-Escravos Road, expected to connect the coastal communities in Warri South and Warri South-West LGAs, have remained abandoned till date,” he said.

    Botosan, therefore, urged the Federal Government to direct MDAs/IOCs to embark on large scale shore protection/sand-filling projects in Itsekiri riverine/oil producing communities.

    He also urged the government to institute a process for the facilitation of the abandoned age-long Omadino-Escravos Road.

    One of the protesters, Mrs Taye Mene, who spoke on behalf of the Itsekiri Women Omadinor-Escravos Federated Communities, said the people were suffering as a result of the consequences of oil explorations in their homeland.

    Ijaws demand ‘right of first refusal’ in marginal fields bids

    Similarly, the Ijaws in Gbaramatu Kingdom, Warri South-West, on Sunday carried out a similar protest, calling on the Federal Government to give its people right of first refusal in the bids for the marginal fields.

    Godspower Gbenekama, Spokesman of Gbaramatu Traditional Council of Chiefs, made the call on Sunday at a news conference held at Oporoza, the administrative headquarters of the Gbaramatu kingdom.

    Gbenekama who spoke on behalf of the chiefs and other sons and daughters of Gbaramatu, some of whom held placards, alleged the marginalisation of the oil-producing kingdom.

    Some of the placards reads: “FG should restart the Omadinor-Escravos road project, “Bring back our Dockyard, NIMASA”, among others.

    “We have by this medium announced our total and unequivocal objection to a bidding process that has for long excluded well-to-do Gbaramatu indigenes from the marginal fields.

    “The Federal Government should come up with modalities where competent companies owned by Gbaramatu indigenes will be given the right of first refusal on oil fields located in Gbaramatu and Warri South-West,’’ he said.

    Gbenekama was unhappy with the ongoing bidding process for the 57 marginal fields by the DPR which according to him had excluded Gbaramatu-owned companies from partaking.

    He appealed to the government to relocate to Gbaramatu the Floating Dock/Ship Building Yard originally planned to aid learning in the Nigerian Maritime University, Okerenkoko.

    Gbenekama also appealed to the Federal Government to resume work on the abandoned Omadinor-Escravos road to boost socio-economic and peaceful co-existence of Ijaws and Itsekiris.

    “We urge the Federal Government to restart the Omadinor-Escravos road project to improve the economic relations between the neighbouring Warri South and Warri South-West Local Government Areas.

    “The Federal Government should also resume work on the multi-billion dollars Gas Revolution Industrial Park in Ogidigben and Deep Seaport in Gbaramatu both in Warri South-West, among others,” he said.

    CSOs decry exclusion in Marginal Oil fields’ bid rounds

    Also, a coalition of Civil Society Organisations (CSOs) had decried their exclusion from the proposed Marginal Oil fields’ bid rounds announced by the DPR.

    The group’s protest was contained in a letter to the DPR, jointly signed by the National Coordinator, Publish What You Pay (PWYP) Nigeria, Peter Egbule; Executive Director Centre for Transparency Advocacy (CTA), Faith Nwadishi.

    Others include Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), Rafsanjani Auwal Musaand, Chairman, Human and environmental Development Agenda (HEDA) Olanrewaju Suraj.

    Others are the National President, Green Alliance Nigeria (GAN) Chima Williams, Chief Executive Connected Development (CODE) Hamzat Lawal; National Coordinator, Media Initiative on Transparency in Extractive Industry (MITEI) Bassey Udo and Programmes Manager, Selemati Foundation, Rita Kigbara.

    Also, Executive Director, Enough is Enough (EiE) Nigeria, Yemi Ademolokun; Principal Lead, BudgIT Foundation, Gabriel Okeowo, Director Civic Media Lab, Akinfolarin Oluwaseun, and Programmes Officer, West African NGO Network (WANGONeT) Sandra Dike.

    The coalition said that the published bid guidelines by DPR did not involve CSOs among agencies that would monitor the exercise of the Federal Government’s planned award of 57 marginal oil fields’ licenses.

    The CSOs said that the published guidelines for the auction were fraught with provisions that might hamper the interest of genuine bidders in the oil fields and deny the country the benefits of set objectives.

    They emphasized strict adherence to globally accepted best-practices, while expressing doubts that the current exercise would bring a different result from the past, if government did not make the process more transparent.

    They, therefore, advocated the immediate inclusion of about two civil society representatives in the bidders screening team as observers to build public trust and investors’ confidence in the bid process.

    The group also sought strong legislative oversight by the National Assembly and involvement of the Nigerian Extractive Industries Transparency Initiative (NEITI) before, during and after the exercise to avoid the experiences of the past.

    “After reviewing the guidelines, and putting into perspective, past experiences and pitfalls of similar processes, we deem it important to draw your attention to some of the points that can hinder the success of the process, or limit Nigeria from deriving optimal financial and socio-economic benefits from the exercise.

    “We are prepared to play our roles as civil society in support of this very important national exercise with the understanding that it is intended and designed to deliver the overriding interest of Nigeria and Nigerians,” it said.

    The group identified licensing as one of the weakest links for value realisation from Nigeria’s petroleum industry, adding that previous exercises between 2000 and 2007 not only fell below global best practices, it failed to secure maximum value for the country’s assets.

    To deliver the expected increase in revenue and proven crude oil reserves as well as increase in daily crude oil production, the group said the government must ensure the set goals conformed to the country’s long-term planning objectives in the sector.

    According to the CSOs, previous licensing rounds in the country were not tied to any comprehensive asset development strategy or broader economic development plans.

    They added that each licensing round of objectives must align with the country’s strategy for managing natural resource base for current and future generations.

    The group also called on the government to strengthen the National Data Repository Geological system by making authenticated and certified data easily accessible to bidders to attract capable investors to the oil assets on auction.

    On the bidding process, the group urged the DPR to adhere to the published guidelines and criteria on the bid to avoid confusion and ensure due process, noting that the de-politicised criteria must be developed to support local content without compromising the sector’s development potential or returns.

    “Nigeria must resist the tendency to extend preferential treatment to companies solely because they are local and well-connected.

    “The DPR should amend the guidelines to accommodate the disclosure by all bidders of ‘sworn declaration, complete, comprehensive and accurate information on their ultimate beneficial owner(s).

    “This will show that Nigeria is fully compliant with her obligations under the EITI and Open Government Partnership (OGP) principles, transparency and a level-playing-field that will not allow ‘business as usual’ by vested interests,” they said.

    Petroleum Minister maintains silence

    Meanwhile, President Buhari, who happens to be the Minister of Petroleum, has maintained open silence so far. Apart from his mention of the 2020 marginal oil fields bid rounds during his Democracy Day speech, no words have been heard from the president.

    “For the first time in over ten years, Nigeria is conducting bidding process for 57 Marginal Oil Fields to increase revenue and increase the participation of Nigerian companies in oil and exploration and production business.

    “With sustained engagement of youths, opinion leaders and other stakeholders, we have restored peace in the Niger Delta Region and maintained our oil production levels,” Buhari stated in his Democracy Day speech.

    No repeat of past mistakes in 2020 marginal oilfield bids – DPR

    However, the DPR had said there will not be a repeat of past mistakes made in previous exercises in the ongoing bid rounds for 57 marginal oilfields in the country.

    Mr Auwalu Sarki, Director, DPR, gave the assurance on June 29 while delivering a keynote address at the Africa Marginal Oilfield and Independent Producers Webinar Conference.

    Sarki said the last bid round conducted in 2003 was fraught with litigations and other challenges which hampered the development of some of the awarded 24 marginal oilfields to the detriment of the nation.

    He was optimistic that the current exercise which was at the evaluation stage, would not encounter similar issues because of the robust and credible processes put in place by the government.

    The DPR boss said: “We have learnt from mistakes made in the past and have come up with workable solutions to ensure that the objective of the development of our marginal fields is achieved.

    “This time around, our awardees will be credible investors with technical and financial capability.

    “There is also the Post-General Award Conditions. This deals with transfer of interest post award. It means awardees cannot transfer more than 49 per cent interest to another party post-award.

    “It also include termination of rights of interest holder which gives the minister power to withdraw the interest of a party who fails to meet its obligations in terms of joint awardees.”

    Sarki further said the conditions protected the interest of all investors, saying that any disagreement arising among awardees and their partners post-award would first be referred to the Nigerian Oil and Gas Alternative Dispute Resolution Centre in DPR.

    He noted that this would reduce the years spent in courts over disputes which usually led to non-performance of the marginal fields, saying that such awards would henceforth be withdrawn by the government.

    “We believe that these steps will bring about a sustainable development of our marginal fields,” the director said.

    He added that the objective of the 2020 marginal field bid round was to deepen the participation of indigenous companies in the upstream segment and provide opportunities for technical and financial partnerships for investors.

    According to him, the existing 16 marginal oilfields contribute two per cent to the national gas reserves and their operations have brought peace and development to host communities in the Niger Delta.

    TNG reports a marginal field is any field that has reserves booked and reported annually to the DPR and has remained undeveloped for a period of over 10 years.

  • 57 marginal fields: Group threatens to cripple oil operations in Itsekiri land

    The Itsekiri ethnic nationality in Delta State has decried what it called its marginalisation in the current bidding process for the 57 Marginal Fields by the Department of Petroleum Resources (DPR).

    They expressed their grievance in Ode-Ugborodo, Escravos, Warri South-West Local Government Area (LGA), of Delta, in a statement, after a peaceful protest on Monday.

    They tagged the protest “Movement for the Development of Itsekiri Oil and Gas Producing Communities’ (MDIOGPC)”.

    The statement was issued by the convener of the protest, Mr Isaac Botosan.

    The group threatened to cripple operations of the Oil and Gas companies operating in their homeland, if the Federal Government refused to halt the current biding process of the 57 marginal fields, and subsequently initiate new modalities.

    The protesters held placards with different inscriptions like: “We need our share of the marginal fields in our locality, DPR take note,” and “Competent companies owned by Itsekiris must be given first right of refusal”.

    Botosan in the statement, condemned the alleged protracted marginalisation of the Itsekiri nation, particularly in the areas of project execution, employment opportunities, infrastructure development, among others; and urged government to address the issues.

    He also urged the Federal Government to initiate new modalities where competent companies owned by Itsekiri indigenous people would be given “right of first refusal” on Fields in their homeland before considering outsiders.

    “We can no longer continue to sit and watch non-indigenes being offered Oil Mining Licenses in our homeland when we have capable Itsekiri people whose firms are qualified, but repeatedly denied such licenses,” Botosan said.

    According to him, the Itsekiri, as a law abiding ethnic nationality, committed to the sustainable peace, growth and development of the Nigerian project, understands perfectly the effect of the COVID-19 on the economy.

    “We are equally not unmindful of the teething security challenges the Federal Government is confronting headlong across the country, especially in the North East.

    “But, we are, however, constrained to ventilate our frustration regarding the brazen and worsening marginalisation, staring at our face daily by those in charge of managing affairs in the Oil and Gas Sector.

    “The marginalisation is clearly evident in a manner that the Multi-Billion Dollar Gas Revolution Industrial Park Project in Ogidigben and Deepsea Port in Warri South-West LGA, have been abandoned.

    “The age-long Omadino-Escravos Road, expected to connect the coastal communities in Warri South and Warri South-West LGAs, have remained abandoned till date,” he said.

    Botosan, therefore, urged the Federal Government to direct MDAs/IOCs to embark on large scale shore protection/sand-filling projects in Itsekiri riverine/oil producing communities.

    He also urged the government to institute a process for the facilitation of the abandoned age-long Omadino-Escravos Road.

    One of the protesters, Mrs Taye Mene, who spoke on behalf of the Itsekiri Women Omadinor-Escravos Federated Communities, said the people were suffering as a result of the consequences of oil explorations in their homeland.

    The Ijaws in Gbaramatu Kingdom, Warri South-West, on Sunday carried out a similar protest, calling on the Federal Government to give its people right of first refusal in the bids for the marginal fields.

  • No repeat of past mistakes in 2020 marginal oilfield bids – DPR

    No repeat of past mistakes in 2020 marginal oilfield bids – DPR

    The Department of Petroleum Resources (DPR) says there will not be a repeat of past mistakes made in previous exercises in the ongoing bid rounds for 57 marginal oilfields in the country.

    Mr Auwalu Sarki, Director, DPR, gave the assurance on Monday while delivering a keynote address at the Africa Marginal Oilfield and Independent Producers Webinar Conference.

    A marginal field is any field that has reserves booked and reported annually to the DPR and has remained undeveloped for a period of over 10 years.

    Sarki said the last bid round conducted in 2003 was fraught with litigations and other challenges which hampered the development of some of the awarded 24 marginal oilfields to the detriment of the nation.

    He was optimistic that the current exercise which was at the evaluation stage, would not encounter similar issues because of the robust and credible processes put in place by the government.

    The DPR boss said: “We have learnt from mistakes made in the past and have come up with workable solutions to ensure that the objective of the development of our marginal fields is achieved.

    “This time around, our awardees will be credible investors with technical and financial capability.

    “There is also the Post-General Award Conditions. This deals with transfer of interest post award. It means awardees cannot transfer more than 49 per cent interest to another party post-award.

    “It also include termination of rights of interest holder which gives the minister power to withdraw the interest of a party who fails to meet its obligations in terms of joint awardees.”

    Sarki further said the conditions protected the interest of all investors, saying that any disagreement arising among awardees and their partners post-award would first be referred to the Nigerian Oil and Gas Alternative Dispute Resolution Centre in DPR.

    He noted that this would reduce the years spent in courts over disputes which usually led to non-performance of the marginal fields, saying that such awards would henceforth be withdrawn by the government.

    “We believe that these steps will bring about a sustainable development of our marginal fields,” the director said.

    He added that the objective of the 2020 marginal field bid round was to deepen the participation of indigenous companies in the upstream segment and provide opportunities for technical and financial partnerships for investors.

    According to him, the existing 16 marginal oilfields contribute two per cent to the national gas reserves and their operations have brought peace and development to host communities in the Niger Delta.

  • Why exclusion of CSOs from 2020 marginal oil fields bid is bad for process

    Why exclusion of CSOs from 2020 marginal oil fields bid is bad for process

    A coalition of Civil Society Organisations (CSOs) has decried their exclusion from the proposed Marginal Oil fields’ bid rounds announced by the Department of Petroleum Resources (DPR).

    The group’s protest was contained in a letter to the DPR, jointly signed by the National Coordinator, Publish What You Pay (PWYP) Nigeria, Peter Egbule; Executive Director Centre for Transparency Advocacy (CTA), Faith Nwadishi.

    Others include Executive Director, Civil Society Legislative Advocacy Centre (CISLAC), Rafsanjani Auwal Musaand, Chairman, Human and environmental Development Agenda (HEDA) Olanrewaju Suraj.

    Others are the National President, Green Alliance Nigeria (GAN) Chima Williams, Chief Executive Connected Development (CODE) Hamzat Lawal; National Coordinator, Media Initiative on Transparency in Extractive Industry (MITEI) Bassey Udo and Programmes Manager, Selemati Foundation, Rita Kigbara.

    Also, Executive Director, Enough is Enough (EiE) Nigeria, Yemi Ademolokun; Principal Lead, BudgIT Foundation, Gabriel Okeowo, Director Civic Media Lab, Akinfolarin Oluwaseun, and Programmes Officer, West African NGO Network (WANGONeT) Sandra Dike.

    The coalition said that the published bid guidelines by DPR did not involve CSOs among agencies that would monitor the exercise of the Federal Government’s planned award of 57 marginal oil fields’ licenses.

    The CSOs said that the published guidelines for the auction were fraught with provisions that might hamper the interest of genuine bidders in the oil fields and deny the country the benefits of set objectives.

    They emphasized strict adherence to globally accepted best-practices, while expressing doubts that the current exercise would bring a different result from the past, if government did not make the process more transparent.

    They, therefore, advocated the immediate inclusion of about two civil society representatives in the bidders screening team as observers to build public trust and investors’ confidence in the bid process.

    The group also sought strong legislative oversight by the National Assembly and involvement of the Nigerian Extractive Industries Transparency Initiative (NEITI) before, during and after the exercise to avoid the experiences of the past.

    “After reviewing the guidelines, and putting into perspective, past experiences and pitfalls of similar processes, we deem it important to draw your attention to some of the points that can hinder the success of the process, or limit Nigeria from deriving optimal financial and socio-economic benefits from the exercise.

    “We are prepared to play our roles as civil society in support of this very important national exercise with the understanding that it is intended and designed to deliver the overriding interest of Nigeria and Nigerians,” it said.

    The group identified licensing as one of the weakest links for value realisation from Nigeria’s petroleum industry, adding that previous exercises between 2000 and 2007 not only fell below global best practices, it failed to secure maximum value for the country’s assets.

    To deliver the expected increase in revenue and proven crude oil reserves as well as increase in daily crude oil production, the group said the government must ensure the set goals conformed to the country’s long-term planning objectives in the sector.

    According to the CSOs, previous licensing rounds in the country were not tied to any comprehensive asset development strategy or broader economic development plans.

    They added that each licensing round of objectives must align with the country’s strategy for managing natural resource base for current and future generations.

    The group also called on the government to strengthen the National Data Repository Geological system by making authenticated and certified data easily accessible to bidders to attract capable investors to the oil assets on auction.

    On the bidding process, the group urged the DPR to adhere to the published guidelines and criteria on the bid to avoid confusion and ensure due process, noting that the de-politicised criteria must be developed to support local content without compromising the sector’s development potential or returns.

    “Nigeria must resist the tendency to extend preferential treatment to companies solely because they are local and well-connected.

    “The DPR should amend the guidelines to accommodate the disclosure by all bidders of ‘sworn declaration, complete, comprehensive and accurate information on their ultimate beneficial owner(s).

    “This will show that Nigeria is fully compliant with her obligations under the EITI and Open Government Partnership (OGP) principles, transparency and a level-playing-field that will not allow ‘business as usual’ by vested interests,” they said.

  • Guidelines for 2020 marginal fields auction faulty, says expert

    Guidelines for 2020 marginal fields auction faulty, says expert

    National Coordinator of Publish What You Pay Nigeria, Peter Egbule has said the guideline issued by the Department of Petroleum Resources (DPR) for the 2020 marginal fields bid round exercise is faulty.

    TheNewsGuru.com (TNG) reports Egbule made this assertion during a Twitter conference with the theme, ‘marginal oil fields auction: why citizens should be alert, concerned and involved,’ hosted by a public policy expert, Dayo Ibitoye.

    The flag-off of the 2020 marginal fields bid round comes amidst the country’s poor financial situation, which has made the implementation of the 2020 budget a Herculean task for the President Muhammadu Buhari government, with capital and recurrent expenditures already slashed.

    This bid round is coming 18 years after the last bid round in 2002 and is open to indigenous oil and gas companies and investors interested in participating in the exploration and production business in Nigeria.

    Prior to the flag-off, stakeholders in the country’s oil and gas industry have consistently urged the Federal Government to conduct an oil bid round for the purpose of raising revenue to fund some of its critical projects.

    But DPR has been charged with negligence to the Global Transparency Initiatives, specifically, the transparency principles of the Open Government Partnership (OGP) and Extractive Industries Transparency Initiative (EITI).

    “We have reviewed the 2020 guidelines, and discovered disturbing loopholes,” Egbule said, stressing, “we have seen DPR’s level of preparedness, officially, but we have also noticed some loopholes in the guidelines they released that could undermine it.

    “Negligence to the tenets of Global Transparency Initiatives that the present administration has assented to; specifically, the Transparency Principles the OGP and EITI were not adhered to in the guidelines DPR released. DPR cannot be said to be ready if loopholes in its own guidelines can be exploited”.

    TNG reports marginal fields are known oil or gas discoveries on an IOC-owned block and where there has been no activity in at least the last 10 years. With the agreement of the IOC, the DPR carves-out a piece of land surrounding the discovery and this becomes a marginal field.

    For the 2020 bid round, DPR announced that a total of 57 fields located on land, swamp and shallow offshore terrains are on offer. According to DPR, the exercise, which will be conducted electronically, will include expression of interest/registration, pre-qualification, technical and commercial bid submission and bid evaluation.

    Egbule while urging the DPR to ensure that bidding companies get the awards on merit only, and not based on political affiliation or connections, said discretionary awards and non-disclosures of owners of the bidding companies are the major worries in the bidding process.

    “This has been the order of the day. Although there has been an attempt at regularizing the process, the same thing continued in 2000, 2003, 2004 2005, 2006, 2007, and 2012. That is why we are asking for beneficial owners disclosure,” he said.

    Egbule noted that Nigeria is the market of the future, not only in terms of exploration only but in consumption. “Our midstream is untapped. We need to start thinking of local consumption. The market is expanding,” he said.

    He went further to advised DPR to do deeper scrutiny of companies’ ownership and capacities to ascertain their capacities firsthand, stressing that unbiased screening and open declaration of both registered and beneficial owners are important.

  • DPR to conclude marginal oilfields bids in 10 weeks

    The Department of Petroleum Resources (DPR) has said it expects to have all complete bids for marginal oilfields round for 2020 within 10 weeks.

    The Director of the DPR, Mr Sarki Auwalu made the disclosure on Wednesday, saying this is the viable option for local firms to own marginal oilfields.

    On Monday, Nigeria launched its first bidding round for marginal fields – smaller blocks typically developed by domestic companies – in nearly 20 years.

    The country expects the bidding round to boost oil output and bring in much needed revenue that has been affected by the COVID-19 pandemic.

    “We feel that now it is time to open up again. There is an appetite to invest in Nigeria, particularly in marginal fields, because the cost of development is small, so it is profitable,” he said.

    Speaking further, Mr Auwalu said none of the fields being awarded were facing legal issues, but courts have blocked two fields that were revoked in April from being included in any new licensing round.

    Interested parties are invited to visit the DPR dedicated portal -marginal.dpr.gov.ng – to access the guidelines for the Award and Operations of Marginal Fields in Nigeria 2020, and the requirements for participation.

    Mr Auwalu also discussed oil production cuts by members of the Organisation of the Petroleum Exporting Countries (OPEC) which Nigeria is expected to cut as much as 400,000 barrels per day.

    He said Nigeria was implementing the full cut it agreed to under the OPEC+ deal, but that the high volume of condensates the country produces makes its oil exports appear higher than they are. Condensates are an ultra-light oil that are not counted as part of OPEC cuts.

    Mr Auwalu said some fields with a particularly large condensate output could go further to reduce the condensate volume.

  • Nigeria May Run Out of Crude Oil in Next 50 Years – DPR

    Nigeria May Run Out of Crude Oil in Next 50 Years – DPR

    The Department of Petroleum Resources (DPR) has disclosed that Nigeria’s crude oil deposit could be exhausted in five decades from now.

    This was contained in its latest Nigerian Oil and Gas Industry Annual Report, which noted that at current reserve depletion rate standing at 2.04 percent per annum, will cease in 2067.

    The DPR then warned that this may be brought forward if oil is exploited at a greater rate as Nigeria may resort to a bigger oil production if its volatile economy faces a large scale crisis that upsets its current balance.

    “The nation’s depletion rate and life index are 2.04 percent and 49.03 years respectively. These parameters lie within the long-term range.

    “However, to achieve the aspiration of the Federal government of 4MMBOPD daily production and reserves of 40MMMB, there is the need for corresponding increase in reserves as production is increases, otherwise, the life index will fall from a sustainable long-term threshold to a less futuristic and sustainable medium to short term range,“ the document said.

    The report further disclosed that the nation’s oil and condensate reserves was shared across various contract types namely Joint Venture, Production Sharing Contract, Sole Risk and Marginal Field.

    Of this four, the Joint Venture, which is constituted by international oil exploration companies such as Mobil, Chevron and Total, is the highest production rate of nearly 41.64 percent. Interestingly, it has a low depletion rate in the neighbourhood of 1.8 percent and a high life index of 56.34 years.

    The Production Sharing Contract, making up 36.08 percent of Nigeria’s total oil output, has the lowest life index of 32.15 years and the highest depletion rate currently 3.10 percent. This means that it poses the biggest threat to Nigeria’s oil future at its current production rate

    The Sole Risk, presently responsible for 20.14 percent of the national production, maintains the lowest depletion rate of 1.5 percent at the same time the highest life index of 65.49 years.

    On its part, the Marginal Field contributes 2.14 percent to the nation’s production basket at a 2.7 percent depletion rate while maintaining a life index of 36.83 per cent.

    Beyond the challenge that the depletion has on Nigeria’s revenue, it was revealed that oil will continue to face less demand as developed and emerging economies warm up for a large-scale migration from gasoline-powered cars to electric cars, shrinking need to buy the nation’s crude oil from some of Nigeria’s oil partners like the US, India, Brazil, Spain, France, and the Netherlands.

    Currently, as the world move to alternative energy, patronage for electric cars is rising spurred in part by the massive campaign for the invention in the Western world and this means no large demand for oil.

    Apart from the peerless benefit of offering renewable energy, electric cars easily promote the global massive campaign for environmental friendly initiatives and do not emit carbon which affects the environment.

    Oil prices are also affected due to its volatility which faced a free-fall lately with Brent Crude (the international benchmark for Nigeria’s Bonny Light) tumbling from $70 per barrel to $57 a barrel since the year began following the spread of the coronavirus in China, one of Nigeria’s crude destinations.