Marginal oil fields: DPR reserves exclusive bids from Nigerians

By The Citizen

The Department of Petroleum Resources (DPR) has said that only companies with 51 per cent equity interests held by Nigerian citizens are qualified to bid for the licence of the 31 marginal oil fields being placed on sale.

The Head of Business Assessment and Lease Management, DPR, Mr. Gbenga Olufadeju, stated while issuing guidelines for the 2013 bidding process for the oil fields on Wednesday in Kaduna.

Olufadeju, however, noted that foreign companies with technical expertise could own up to 49 per cent equity of a bidding company.

He said independent oil marketers could as well team up to bid for the oil fields.

'In bidding for the 31 marginal oil fields, foreign companies with technical expertise can own up to 49 per cent equity of a bidding company but no foreigner would be allowed controlling shares of the companies,' he said.

He said the objectives of the current exercise were to grow reserves and boost production, promote indigenous participation in the upstream sector of the industry and increase Nigerian content development.

He explained that in selling the oil field, the Federal Government intended to increase the oil reserves to 40 billion barrels and production of crude oil in the country to four million barrels per day.

He said out of the 24 fields that were awarded to 31 local companies in the 2003 rounds, only seven of the licences had been able to produce from the fields 10 years after.

According to him, lack of funds and inadequate technical expertise have been identified as some of the challenges being faced by the local operators.

He said such docile oil fields would subsequently be re-awarded to competent bidders in order to salvage the situation.

Olufadeju added that each prospective company that wish to participate in the process could bid for a maximum of three fields, with each field requiring a separate application and would be required to pay a total fee of $28,000, including application fee and fee for data prying.

He said, 'Oil blocks contain many fields, once unused for 10 years, they are re-awarded. There are 31 oil fields on offer this year to grow oil and gas reserves, increase production and enhance indigenous capacity and promote indigenous participation.

'This procedure started 10 years ago when 24 marginal oil fields were awarded in 2003 with only eight of them currently producing to add 100 barrels of oil to the national reserve.

'In 2003, the award process took three years with most participants lacking financial resources and technical capability, but this year's award is expected to last only three months.

'The investors are expected to have access to funds, each participating company should have at least four shareholders with none owning more than 25 per cent equity shares; no individual should participate in more than one company and no company should participate in bidding for more than three fields.'