Marginal fields: 161 firms get licenses for 57 fields

Federal government has finally delivered the long awaited Petroleum Prospecting Licenses (PPLs) to some 161 indigenous companies that qualified from the 2020 marginal bid round.

The awards which were distributed by Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Tuesday at a ceremony in Abuja would be the first set of licenses to be given to players in the upstream petroleum industry under the new PPL model introduced by the Petroleum Industry Act (PIA).

The 161 companies comprising mainly new exploration and production upstarts will now form partnerships and mergers to fit into 57 available marginal fields. A total of 665 companies participated in the bid round.

Chief Executive Officer of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), Mr Gbenga Komolafe, stated earlier that the agency which administers the nation’s hydrocarbon exploration and production acreages has already laid workable templates for the licensees to forge partnerships.

Minister of State for Petroleum Resources, Chief Timipre Sylva, said the maiden presentation of the PPL was part of the implementation of Petroleum Industry Act (PIA), 2021.

 “The implementation of the PIA 2021 is in top gear. Consequently, the new awardees should note that their assets will be fully governed by the provisions of the PIA 2021.

“As you develop your assets with the special purpose vehicles (SPVs), ensure that good oilfield practice is employed, environmental considerations and community stakeholders’ management are not neglected.

“It is my strong belief that the awardees would take advantage of the current attractive oil prices to bring these fields into full production within a short period to increase production, grow reserves and reduce cost of production.

“The onboarding of new oil and gas players in the petroleum sector is part of this government’s policy to encourage more indigenous participation in our petroleum operations,’’ agency sources quoted from the minister’s speech.

Sylva said the development would boost activities in the oil and gas sector.

He added that it would boost production output and create additional employment opportunities for Nigerians

Mr Gbenga Komolafe, Commission Chief Executive (CCE) NUPRC, recalled that one of the major tasks inherited by the commission, upon its inauguration in 2021 was the need to conclude the 2020 Marginal Field Bid Round.

He said the exercise was faced with several constraints which included the COVID-19 interruption, partial payment of Signature Bonuses by some awardees, and the unwillingness of co-awardees to work together in forming SPVs for field development.

He said the marginal field’s award initiative began in 1999 and was borne out of the need to entrench the indigenisation policy of government in the upstream sector and build local content capacity.

He recalled that since its inception, a total of 30 fields had been awarded with 17 currently producing.

He said that the 2020 Marginal Field Bid Round exercise in respect of which PPLs were being issued had attracted government revenue of about N200 million and seven million dollars, respectively.

He said it was significant to note that the passage of the PIA brought an end to the era of Marginal Field awards.

“Section 94 (9) of the Act states that no new Marginal Field shall be declared under this Act”.

“Accordingly, the minister shall now award PPL on undeveloped fields following an open, fair, transparent, competitive, and non-discriminatory bidding process in line with Sections 73 and 74 of the Act,’’ he quoted.

Komolafe said the impact of the upswing in the crude oil price was not reflecting in the nation’s revenue earnings due to disruptions in our national oil production owing to sabotage, theft, and other operational challenges.

He urged the potential companies to take advantage of the current market realities and quickly bring their fields to production.

Speaking on the unveiled Host Communities Development Regulations, he said it was significant for the commencement of implementation of the provisions of Section 235 of the PIA, for attraction of dividends to the host communities.