New list of fields sent for Nigerian marginals round
The second marginal fields round in Nigeria has entered a period of some confusion, with a new list of proposed fields being sent out last week which includes some producing acreage and fields for which development plans have already been submitted.
While the timing of the round seems inextricably linked with the passing of the Petroleum Industry Bill (PIB), the Department of Petroleum Resources last week sent out a list of 150 fields to be included in the round and somewhat optimistically said it still hoped to hold the round in November. The letter did however ask operators how quickly they could give up acreage.
The PIB and the round are allied partly in terms of the legal and fiscal framework but also because there are suggestions that political support for the passing of the PIB could be influenced by the awards from the round.
Recent research by Rystad Energy shows that the fields included in the 2004 round have yet to realise their full potential. A total of 24 fields were awarded to 30 companies but only 30% of the potential 360m bbl of reserves have been put into production. Of the remaining reserves, 30% are being developed including the Ebok and Ajapa fields.
“It seems logical that tougher demands should be put on companies being awarded Marginal Fields in the next rounds by the Nigeria DPR. This could include a qualification programme to ensure companies are adequately organised and capitalised, tighter planning and milestones that are followed up and checked for progress, and greater diversity of types of companies including indigenous and international companies,” Rystad partner Anders Wittemann argued.
“At the same time, operators should be better incentivised for upfront expenditures for optimal resource management, including gas monetisation, for example through tax allowances and guaranteed gas/power prices,” he added.
The analysts believe that tax and royalty payments on the fields that are in production or development will be almost US $9 Bn, whilst the amount for the remaining 40% of the reserves without clear plans would have been another $9 Bn, at current forward oil prices.
