Regulatory conflicts frustrating marginal field operators – Stakeholders

Mordecai Danteni Baba Ladan,, Director, DPR

Mr. Mordecai Ladan,, Director, DPR

25 August 2016, Lagos –  Industry stakeholders have identified multiple regulatory conflicts as one of the challenges frustrating the operations of marginal field companies in the country.

They stressed the need for the government to align its policies in order to curb the conflicts by its regulatory agencies.

The stakeholders spoke at the 2016 Africa Small and Marginal Oil Fields Development Conference held in London on August 17 and 18.

According to a communiqué obtained by our correspondent, some of the keynote speakers at the conference were the Deputy Director/Head, Upstream, Department of Petroleum Resources, Mr. Emmanuel Bekee; the Managing Director, LADOL, Dr. Amy Jadesimi; the Chairman, Platform Petroleum, Chief Dumo Lulu-Briggs; the Managing Director, Energia, Mr. Felix Amieye-Ofori, and the Managing Director, Standard Bank, London, Damien Mauvais.

They said other challenges affecting the development of marginal fields included funding issues, shortage of foreign exchange due to low oil prices, insecurity and deferred production due to attacks by militants, fiscal issues that pertain to royalty, petroleum profits tax; low oil prices and market volatility, and declining foreign direct investment due to country risks and risks from host communities.

They said government must be proactive to global issues, support marginal field operators and should not use the same yardstick to regulate marginal field operators and international oil companies.

The communiqué said, “Indigenous companies should also ensure corporate governance by avoiding anything that will dent their reputation, and create a high-performance corporate culture to be a preferred place to work.

“They should build strong team with technical and organisational expertise; uphold social licence and robust community relations; have proper internal control system; show competency in health, safety and environment; seek quality alliance/partnership and invest in human capital to ensure capacity building through quality training.”

The conference said indigenous marginal fields operators should have the right story in order to access funding from banks, adding, “This will entail a clear strategy, which shows a well-defined route to production; presenting a right team that has a track record of value creation and also indicating that they have done it before.

“The indigenous company seeking for fund must also show consistent progress towards production and should not over-promise or under-deliver. It is also important that such companies should be able to demonstrate asset value through access to good data, opinion from credible third party and present a well-identified upside by way of intents for future acquisition.”

According to the communiqué, participants agreed that if gas from marginal fields were aggregated, it would be a great asset for socio-economic development and gas-to-power projects will drive economic buoyancy and de-risk community unrest through the provision of electricity.

It said, “One of the critical discussion points was the germane need for government to overhaul its gas policy. Participants were of the opinion that various government regulatory bodies on gas and marginal fields should align in order to avoid confusion and achievement of intended goals.

“This could be realised by providing good legislation, infrastructure, price reforms, endearing peace and controlling the quagmire of incessant uprising by militants.”

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