Stakeholders decry funding challenges confronting indigenous oil producers

From left, Mr Bank Anthony Okoroafor, Chairman of Petroleum Association of Nigeria (PETAN); Mr Lawal Gbolahan, Secretary of PETAN and Mr Wale Sanyaolu, Energy Expert/Analyst, at the annual conference of Society of Petroleum Engineers (SPE) in Lagos, recently.

Stakeholders in the oil and gas industry have decried the existing funding challenges confronting indigenous oil and gas producers in the country.

Speaking at the recently concluded annual conference of the Society of Petroleum Engineers (SPE) in Lagos, the Managing Director/Chief Executive Officer, Energia Limited, Mr Felix Amieyeofori, stated, in his presentation titled ‘Practical approach to mitigating associated project risks and uncertainties in marginal field development: key elements and economic consideration, that funding challenges for low reserve volumes require operators poling facilities together into a cluster operation.

“Operators need to structure to attract financing partners including contractors financing models. Contractor financing model is a little premium/mark up to provide services with future payment guarantees from production. Another method is crude off takers funding which refers to cash advance for field development with payment through crude off take.

“Turnkey contractors with some premium upon successful development of assets. Build, operate and transfer (BOT) model for some infrastructure projects like gas plants, flow stations and pipelines,” he said.

Furthermore, he argued that the government should generate an articulate information memorandum consisting of detailed technical development of the field, revenue status of the operator, proposed development of the field, phase by phase development of the field, re-entry of the existing wells, drilling of new wells, flow of hydrocarbon either by existing pipeline or trucking.

He said stakeholders should ensure professional corporate governance and equity management. “Avoid family laden organisation and strong technical expertise and technical experience. This gives lots of comfort to financier to know that the company has the capacity to execute/operate the field with emphasis on track records, asset specific knowledge, regulator/host community engagement.

“Strong internal control mechanism for strong and effective risk management frame. Competency in terms of Health, Safety and Environment (HSE). Adequate and effective HSE policies and implementation programme that minimise operational hazards to ensure the overall safety of employees and other relevant stakeholders.

“Strong financial reporting process with the disclosure requirement of IFRS. Robust and secured Information Technology infrastructure to support the company in meeting its strategic objectives. Quality of alliance or partnership with companies that are capable of addressing operational challenges currently faced by the operator,” he said.