Marginal oil field licences issued after delay for a year
By Jeph Ajobaju, Chief Copy Editor
Abuja made at least N2 trillion between 2020 and 2021 from the sale of oil fields with reserves and production potential considered marginal for technical reasons.
Marginal fields exist under current Oil Mining Leases (OMLs).
After 18 years of the last bid rounds, the defunct Department of Petroleum Resources, put up 57 onshore, swamp, and shallow offshore fields for bidding, and set 1 May 2022 for the issuance of licences to winners.
But the licences were not issued due to delays in payments of fees and bonuses by the winners, according to sources with knowledge of the process.
Investigation shows that each awardee paid N48 billion (in fees and bonuses) for a licence, which amounted to a combined N2 trillion revenue for the government.
The N48 billion paid comprised
- Registration fee – N500,000
- Application per field – N2 million
- Bid processing fee – N3 million
- Data prying fee per field – $15,000
- Data leasing fee per field – $25,000
- Competent persons report per field – $50, 000
- Specific report per field – $25,000
Nigerian Upstream Petroleum Regulatory Commission (NUPRC) Chief Executive Gbenga Komolafe disclosed in January that about N174 billion was raised from the 2020 bid rounds but about 33 awardees did not pay within the specified 45 days.
It was learnt that new investors later came in and paid for the fields.
About 87 of such fields have been developed since 2002, including 57 which sales are being finalised by the government.
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Issuance of new licences
The NUPRC disclosed in a statement on 25 June that it would this week issue Petroleum Prospecting Licences to awardees of the fields – over one year after the licences ought to have been issued, according to reporting by The PUNCH.
Nigeria is facing low oil production because of low investment in the upstream sector, among other reasons.
“The licence issuance has already been delayed for over one year. If the licences had been issued earlier, the winners would have started work; this would have added to the dwindling oil and gas production of the country. Some of these awardees would have also taken loans,” said oil and gas expert Bala Zaka.
“And don’t forget, Nigeria’s currency has witnessed serious devaluation and, as such, most of them may not be able to afford paying up. Some of them would have even paid back the loans, while some would have moved on to other businesses.”
Zaka advised the winners not to delay exploration.
Need for immediate exploration
International Energy Services Chairman/CEO Diran Fawibe said NUPRC should ensure the processes are streamlined to enable licencees begin work immediately.
His words: “The federal government needs to deepen their engagement with the authority, and make sure all the processes are streamlined, and the operators will not have any problems.
“Once they are given their licences, we expect them to go into operations quickly. The government wants to improve the oil production through the marginal fields. As you know, our production figure has been lagging, and we don’t meet OPEC quota.
“The government is now looking to the independent and marginal field operators to improve their operations and increase production level.
“If the oil companies are not making investments, we expect the marginal field operators to put their acts together and fund the development of the fields.
“One hopes it won’t be that they just take the permits and sit on them because it will be a big tragedy for the country. It is better late than never.
“The operators should go full blast and within a short time, about 12-18 months, some of the streams should come on stage and add to our crude oil production.”
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