As lawyers, experts give perspectives on Nigeria’s oil marginal field investments

Following the launch of the new marginal field bid round by the Department of Petroleum Resources (DPR), a Lagos based commercial law firm, Perchstone & Graeys LP, in recognition of the importance of key stakeholder engagement in this defining bid round, organized a webinar tagged “Perspectives on Investing in Nigeria’s Oil Marginal Fields.”

The webinar was organized based on the belief that marginal fields are expected to continue to play a significant role in the oil and gas sector, including the promotion of indigenous participation, increased oil production capacity and gas reserves, as well as growth in the employment of competent Nigerians.

The webinar discussion therefore focused on key issues surrounding the ownership of marginal oil fields in Nigeria, investment considerations, associated risks, and projections regarding the 2020 guidelines.

The first marginal field bid process occurred in 2002 and at the end of that process, 24 marginal fields were awarded to 32 companies. Other bid attempts following the 2002 event were unsuccessful. To facilitate the 2020 bid round, the DPR revoked previously awarded marginal fields and has made 57 marginal fields available for bidding. The DPR has also released the 2020 Guidelines which set out a roadmap of sorts for this bidding process. The process is delineated into seven stages; from the application by interested bidders to the announcement of winning bidders.

Then webinar session was moderated by Mr. Tolu Aderemi, Partner at Perchstone & Graeys, and head of the firm’s Energy & Infrastructure team. The rich and diverse roster of speakers featured Mr. Osten Olorunshola, former Director, Department of Petroleum Resources; Mr. Abiye Membere, Former Group Executive Director Exploration and Production, NNPC; Mr. Glossner, CEO & Founder of Domusaurea Consulting; and Mr. Ashu Shinghal, Chief General Manager, Corporate Strategy Planning & Advocacy GAIL (India) Ltd.

Mr. Olorunshola, the webinar’s keynote speaker, suggested that a timely legislative intervention such as the passage of the Petroleum Industry Bill would come in handy at a time like this to encourage participation. He cited demand reduction and destruction, price war, and market damage as contributing factors to the present dearth of investment in the sector. He however, encouraged industry players to look beyond and strive to gain market share now as there are still untapped resources to be harnessed in the sector.

Addressing the critical investment considerations and actions for any successful marginal field in Nigeria, the speaker advised investors to pay close attention to bankable reserves, technical personnel, financing methods, and strategic partnership arrangements to mitigate the associated risks that have contributed to the abysmal failure of marginal fields.

Commenting on critical considerations in the marginal oil field, Mr. Glossner of Domusaurea Consulting stated that financing and security are important for potential foreign investors and if foreign investors must come, the cost of production has to be kept low given the current global crude prices. He further stressed the need for sustainable policies and for Nigeria to look into other energy sources that are aimed at a “Green Future.”

Mr. Membere emphasised that success in the 2020 marginal field bid round hinges on the ability to capitalize on lessons learned from the 2002 bid round. He commended the incorporation of community and state participation as a requirement under the new bid round guidelines, describing it as a welcome development. However, Mr. Membere recommended that a regulatory mechanism to checkmate the extent of community participation be set up to achieve the intention of this new condition.

Mr. Ashu Shinghal of GAIL (India) Ltd, commented on investment strategy. Mr. Shinghal noted that a probable incentive for investing in marginal fields during the pandemic would be in gas commercialization and utilization. He pointed to the steady increase in gas consumption in India and the government’s increasing support in gas commercialization. Mr Shinghal urged the Nigerian government to introduce fiscal incentives for the gas commercialization industry to encourage marginal field investors.

Mr. Aderemi conclusively stressed the need for potential investors to engage professionals at every stage of the bidding process given that the failures of the last marginal field bid rounds could largely be attributed to toxic partnerships and failure of investors to engage the right advisory team before investing.

It is not in doubt that there is an urgent need for a policy thrust that de-prioritizes the revenue generation motive which is currently evident in the exorbitant fees and signature bonuses for the bid rounds as to do otherwise could dissuade potential investors, considering the global demand for oil.

YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE

Buy and read digital replicas of your TRIBUNE titles by subscribing through E-VENDING

Buhari Expresses Shock Over Boko Haram’s Attack On Gubio
President Muhammadu Buhari has expressed deep shock at Boko Haram’s attack on Gubio village, Borno State in which the terrorists killed many people. A statement issued in Abuja on Wednesday night by Garba Shehu, Senior Special Assistant to the President (Media & Publicity) said as news of “one the most brutal terrorist… Read full story

Foreign Herdsmen: No Law Stopping Cross-Border Movements ― FG
Despite the menace posed by foreign herdsmen, the Federal Government has said that there are currently no laws preventing cross-border movements. The Minister of Interior, Rauf Aregbesola, who stated this on Wednesday at the end of the Federal Executive Council (FEC) meeting at the Presidential Villa in Abuja, however… Read full story

Police Arrest Man For Raping 40 Women In Kano
The Police Command in Kano State has arrested a 32-year-old man, Muhammad Alfa, for allegedly raping 40 women in the past one year in the state. The Spokesman of the Command, DSP Abdullahi Haruna, confirmed the arrest in a statement on Wednesday in Kano… Read full story

I Have No Problem With Makinde ― Alaafin
The Alaafin of Oyo, Oba Lamidi Adeyemi, on Wednesday, said he held no grudge against Governor Seyi Makinde. There had been insinuations that Oba Adeyemi had ill-feeling towards Makinde following the recent siting of a mobile police force squadron in Ago-Are, Oke-Ogun area of the state… Read full story

Africa’s COVID-19 Cases Over 200,000 ― WHO
The World Health Organisation (WHO) says confirmed novel coronavirus (COVID-19) cases in Africa are more than 200,000. The WHO Regional Office for Africa in Brazzaville, Congo, gave the update on its official twitter handle @WHOAFRO… Read full story

UPDATE: FEC To Initiate Tougher Action Against Rapists
The Federal Executive Council (FEC) has announced that more decisive action is to be taken against rapists henceforth as the government has expressed worries about the upsurge in the menace. This followed a presentation by the Minister of Women Affairs, Mrs Pauline Tallen, to the council meeting presided over… Read full story

Nigeria, India, DR Congo Home To Over 33% Of World’s Poorest, Says World Bank
The World Bank has said that more than a third of the world’s poorest people live in Nigeria, India and Democratic Republic of Congo, even as the COVID-19 pandemic pushes about 100 million people into extreme poverty. Those who live on less than $1.90 per day are categorised as being in extreme poverty… Read full story

COVID-19: Kogi Directs Workers On Levels 01-10 To Resume
Governor Yahaya Bello of Kogi State has directed civil servants on Salary Grade Levels 01-10 to return to work on June 15. The directive was contained in a statement issued in Lokoja on Wednesday by the state Head of Service, Mrs Deborah Ogunmola… Read full story

Another Death In Aso Rock As Aisha Buhari Loses Protocol Officer
Wife of President Muhammadu Buhari, Aisha Buhari, on Wednesday, announced that she lost a protocol officer, Sani Yekini, after battling with diabetes. Aisha, who made the announcement in a tweet on her official Twitter handle, described Yekini who has been working with her for four years as “a very committed… Read full story

COVID-19: Senator Ndume Advocates Part-Time Status For Lawmakers, Reduction In Salary
Senator representing Borno south and Chairman, Senate Committee on Army, Ali Ndume, has advocated part-time status for lawmakers in the country due to the dwindling effect of COVID-19. In a statement made available to newsmen on Wednesday, the lawmaker who sought for the office of Senate President last… Read full story

N2.2bn Land Scam: Deposed Emir Sanusi Appeals Judgment
The deposed Emir of Kano Muhammadu Sanusi II, on Wednesday, appealed a judgment delivered by a Federal High Court dismissing his right of fair hearing against the Kano state Public Complaints and Anti-Corruption Commission. Counsels to the emir, Messrs Dikko and Mahmoud, filed the appeal on Wednesday… Read full story

Orange Juice Excellent For Tooth Disorders, Heart Diseases —Experts
THE orange contains a variety of health-promoting properties. The fruit is a rich source of protective food ingredients like vitamin A, B, C and calcium. Recent studies have proven its superiority to any other fruit as a source of calcium. The orange also contains sodium, potassium, magnesium, copper, sulphur and chlorine… Read full story

EDITORIAL: The Story Of Majek Fashek
BY the time he died on June 1, aged 57, Majekodunmi Faseke, or simply Majek Fashek to his distraught fans all over the world, had lived his life to full circle. Of course, he was not an old man, but he had arguably seen it all. From the low, deprived, humble beginnings of childhood and the boisterous struggling years of adolescence to the peak of prominence and global fame, then back to the ebb of existence, Majek Fashek had seen it all. Not many older persons could claim to have fumbled and tumbled through life than the man fondly referred to as the Rainmaker… Read full story