A Review of the Nigerian Energy Industry

DPR gives investors two-year deadline to develop marginal fields

George Osahon, Director, DPR
George Osahon, Director, DPR

13 December 2013, Lagos – The Department of Petroleum Resources (DPR) has asked investors bidding to acquire marginal oil fields in the current bid round to make sure that fields that would be allocated to them are developed within two years upon allocation or risk losing them.

Director of DPR, George Osahon, Thursday in Abuja, disclosed the department’s stance on the development of the marginal fields during a road show for the 31 marginal fields.

While reeling out the legal requirements for participation in the process, Osahon noted that what transpired in 2003 where the field winners were still unable to develop their fields 10 years after the process was started, would not be allowed to happen this time.

He said: “Any company that is bidding this time around you cannot have any promoter that has more than 25 per cent shares in the company, also among the promoting team, shareholders, you must have at least one of them being somebody who is in experienced in upstream that is exploration and production components.

“I must say that access to financing is critical in the bid process; I have not said the stack of cash in your account and my accountant said line of sight to the funding. In which case they must be able to see from the information you provide your access to finance.”

“One of the issues we have had so far is that people get fields, 10 years after they get the field, they have not done a thing. If you recall, marginal field by definition means a field that has been discovered by major IOCs and 10 years thereafter they have not developed those fields. We take those fields from IOCs give them to Nigerian companies and another 10 year down the road those fields have not been developed and then you ask yourself what is the difference.

“We do not want to give these assets out and wait for another 10 years for them to be developed, therefore we have indicated again as one of the conditions, if you get a field within two years of getting it you should have done something. If you have not, the powers-that-be will take the field from you,” Osahon explained.

He further clarified that the marginal fields bid round was specifically designed for Nigerian companies whose 51 per cent equity shares must be owned by Nigerians, adding that the round was not just meant to grow production but to also increase the capacity of Nigerian firms to operate in the petroleum industry both locally and internationally.

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, who had earlier spoken promised that unlike the last bid round whose process lasted for four years, this round would be concluded in five months.

Alison-Madueke, who was represented by the Permanent Secretary in the ministry, Danladi Kifasi, urged local firms to form partnerships to increase their chances of winning the fields.

– This Day

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