FG Grants Provisional Award Tenders for 57 Marginal Oilfields

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•To earn $500m in signature bonuses

Emmanuel Addeh in Abuja with agency report

The federal government has provisionally awarded tenders to develop 57 of its marginal oilfields, which could net the government $500 million in signature bonuses.

A report yesterday by Reuters quoted four sources familiar with the matter as saying that provisional award letters were sent last week by the Department of Petroleum Resources (DPR).

Although a DPR’s spokesman did not immediately return a call, seeking comment, a source within the company told THISDAY that the company was planning a detailed statement on the development before the end of the week, saying that it remains a public event.

The DPR, it was further learnt, requested payment within 45 days in order for the bid winners to secure the awards of the marginal fields which are smaller oil blocks typically developed by indigenous companies.

Nigeria is looking to boost production from the fields to bolster state finances and increase local participation in the oil sector, which provides the bulk of the country’s foreign exchange.

While local companies have become increasingly important to the industry, it remains dominated by international oil majors.

The 57 oilfields in the current auction, which was launched last June, are part of the first marginal field round in nearly 20 years.

DPR head, Mr. Sarki Auwalu, had said previously that he expected Nigeria to net $500 million from the signature bonuses, which companies, for the first time, pay in either dollars or naira.

The sources said the bonuses each company would pay range from a few million dollars to more than $12 million.

As of last month, 161 bidders were still in the race for the fields. One of the letters seen by Reuters awards a share of one of the fields and said the company will be expected to develop it with several unnamed companies.

Sources said that the DPR was awarding each field to more than one company, a process referred to as “arranged marriages” in the Nigerian oil and gas industry.

However, there have been questions over the openness of the process, with some participants saying that it lacks transparency, and that placing companies together on fields without their agreement could hinder field development.

Of the 24 fields awarded in the last round in 2002, only 13 are producing, while the government revoked the 11 non-producing licences, though there are ongoing legal challenges.

In an interview with ARISE NEWS Channel, THISDAY’s broadcast arm, recently, the DPR Director stated that the 57 fields that were picked were some of the most lucrative in the country.

He stated that the criteria for picking the bidders for the final rounds were open, while some of the requirements were impeccable evidence that bidders have an inclusive programme for the people of the communities have a spread of Nigerian outlook and must have a strong financial base.

He added that agencies like the Financial Intelligence Unit, Department of State Service and Federal Inland Revenue were involved in qualifying and validating all the information supplied by the applicants to ensure credibility.

Auwalu added that there would be no political interference in the awards, noting that “discretion is very impracticable” in the current process unlike in the past.