Marginal oil field operators asked to restructure to attract offshore financing

Against the high failure rates in Nigeria’s marginal oil fields, operators seeking needed funds to compete optimally have been told to restructure their equity and ownership to attract offshore funds.

This is as experts in oil financing have said Nigerian banks are facing over-exposure in the oil industry.

These are the highlights of the 4th Abuja Petroleum Roundtable (APR) being organised by Port Harcourt-based Ibeji Associates at the Transcorp Hilton, beginning from Monday.

Felix Amieyeofori, a marginal field operator (MFO) and managing director, Energia Limited, in his submission on ‘Building Appropriate Relationships for Successful Exploration and Production (E & P) Project Finance’, said most operators lose almost 60 percent of project funds to non-production activities, driving costs higher.

Amieyeofori said his firm once stayed for one full year on site without doing any work due to one issue or the other and called for what he termed “drilling on paper” to enable an operator treat all exigencies before actual drilling.

The Energia CEO was helping to open the eyes of most oil bloc owners that have not drilled any well due to protracted issues especially funding. He said issues from the regulators (Department of Petroleum Resources (DPR)), host communities, etc cause loss of man-hours and funds, meanwhile, the funds were often borrowed at high rates.

Amieyeofori advised the operators to adopt a stakeholder approach whereby all groups with anything to do with the oil field are brought to a platform where all cards must be put on the table. “Try to sort out all partners before deploying to site. You must report to your bank because some of them are fast acquiring capacity to deal with oil industry financing. It is not easy to manage $25 million for an oil well and you have many wells on your hands”.