09 December 2014, Abuja – The operation of the Nigeria independents in the upstream sector is set to experience a growth path similar to that of the downstream sector, which is dominated by Nigerian indigenous operators.
According to the Director of Petroleum Resources, Mr George Osahon, the cheering development would however put a lot of stress on the regulatory authority, which must therefore be clear about its roles and responsibilities and be in position to ensure compliance without stifling commerce and operational activities.
Delivering a paper titled, ‘Emerging Independents and Nigeria’s Reserves Growth’ at the monthly Question and Answer session of Lagos Oil Club, Osahon, who was represented by Mr Emmanuel Bekee, Deputy Director, Department of Petroleum Resources (DPR), predicted that the Nigerian independents would control between 40 per cent and 50 per cent of the nation’s crude oil reserves of about 37 billion barrels in the short to mid-term periods.
The event, which was sponsored by PanAfrican Capital Plc, witnessed robust discussions by stakeholders in the oil and gas sector.
Osahon said that while independents currently control only about 10 per cent of production at the moment, growth would be rapid in the foreseeable future.
He stressed that DPR would continue to push for more compliance with the law, while the operators were being encouraged by other developments within and outside the sector.
“The financial services sector of the economy is reacting more positively to upstream investment and would encourage more mergers and acquisitions activities even among independents including marginal field operators and create more verve in the industry,” Osahon predicted.
He stated that independents would have no choice but to work together especially in the area of terminal operation and establishment to minimise crude allocation and custody transfer challenges.
Osahon, however, lamented that only nine out of the 24 marginal fields awarded in 2003 had gone into production, while a good number of those on production including independents hardly met their obligations on royalties, concessional rentals and flare penalty payments with serious impact on government earnings.
“A few months to the second deadline for the commencement of production from the Marginal Fields 2003, several asset owners are still locked in inter-partnership squabbles or demanding exorbitant farm-in fees,” he further said.
In his presentation, the Head of Finance and Strategy at PanAfrican Capital Plc, Mr Lanre Bakare said the company’s primary objective of sponsoring the lecture was to support local indigenous companies.
“As a key player in the upstream sector of the economy, we are committed to giving them appropriate finances,” he assured.
– This Day
