Speaking at an engagement meeting with the 2020 MFBR awardees, the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe and other stakeholders in the sector raised concerns over changes introduced by the Petroleum Industry Act (PIA), the inability of some awardees to make full payment, legal battles and other challenges that may affect the overall development of the fields.
According to extant regulations, marginal fields are developed where existing oil fields have been left undeveloped for at least 10 years. The law provided that such fields could be farmed out to independent and indigenous companies in collaboration with leaseholders, mainly International Oil Companies. But the PIA has changed the concept.
In the past 21 years, about 87 of such fields have been developed, including the 57 currently being finalised by the Federal Government.
Komolafe, who came into office on the backdrop of the PIA and after the fields had been awarded, noted that while a total of 665 entities expressed interests and 161 entities emerged as potential awardees, signature bonuses for 119 awards were fully paid, nine awards were partly paid for and 33 awards were not paid for.
This development, according to him, has resulted in various challenges inhibiting the close-out of the exercise, stressing that the marginal field guidelines provided for 45 days for the payment of signature bonus which has since elapsed.
Komolafe insisted that the agency was doing everything possible to allay concerns and challenges facing the investors.
“NUPRC management, on its assumption, set up a committee to look into issues surrounding the bid round and come up with strategies to resolve them. And some of these issues include the formation of SPVs, equity participation, and part payments.
“The committee has had engagements with some awardees and will progress with these meetings with another set of awardees slated for next week in Lagos.
Furthermore, the commission, through the Alternative Dispute Resolution Centre (ADRC), offers an opportunity for co-awardees of marginal fields to resolve issues speedily and amicably,” he said.
The regulator equally noted that for fields whose Special Purpose Vehicles had been signed, there might not be any need for farm-out agreement as implied in PIA 2021, as Komolafe noted that the commission would take necessary measures to assist the awardees to take over the assets for development and accelerated first oil.
The provision of the marginal fields before the PIA did not consider fields by license holders for development because of assumed marginal economics under prevailing conditions.
Fields were also seen as any field that has had an exploratory well drilled on the structure and reported as an oil and/or gas discovery for more than 10 years.
Under the PIA, section 94, subsection eight sees marginal fields as one which has been declared a marginal field prior to 1st January 2021 or which have been lying fallow without activity for seven years after its discovery prior to the effective date.
According to the section, no new marginal fields shall be declared under the PIA 2021.
