Following an earlier report by BusinessDay that questioned the Department of Petroleum Resources (DPR) tardy process of managing the bid rounds, the DPR has released guidelines for the forthcoming oil marginal fields bid rounds according to a ThisDay report.
The report says the FG is looking to raise $300m, while demanding investors to part with $300,000 as signature bonus. It mandates that indigenous companies must have at least 51 per cent of the beneficiary interest in the company, must be registered solely for exploration and production business, to be allowed to participate.
Companies will show proof of local content application and the process may include the contentious discretionary award of oil blocks to Niger Delta citizens. Below are further key guidelines of the bid round:
- Investors to pay $50,000 for Competent Persons Report (CPR)
The CPR will require bidders to provide details of their shareholding structure, names of their directors, track record in the oil and gas sector, audited financial statements, partnership and/or collaboration with indigenous firms, and financial resources to bid and pay for the oil acreages.
- Investors to pay $15,000 each as data mining fees
The purpose is to enable them gain access to the relevant data on the acreages that will be placed on offer. Upon payment of this sum, investors will access information on the size of the fields, seismic surveys, and past appraisals conducted by IOCs, among other relevant information.
- Prequalification for technical evaluation stage
After these payments, the bidder moves to the next stage which will be a data evaluation stage of all the bids submitted by the firms. This stage basically evaluates their technical competence to carry develop the fields. At this stage, investors who fail to meet the criteria would be dropped.
- Commercial bid stage
Investors that have passed the technical evaluation process will then be invited to submit their commercial bids in a process that will be open to the public. Oil acreages are awarded to the highest bidders who also have technical competence and will be given a timeline within which to pay for the oil acreages. Where a bidder fails to meet the payment terms, the second bidder (reserve bidder) will be invited by the DPR to take up the block.
- Payment of signature bonus within 90 days of award
The guidelines states that the signature bonus shall be paid within 90 days of the date of the award. Any successful company that fails to pay the signature bonus at the expiration of the 90 days will be issued a revocation notice, which shall last for 30 days. If the company still fails to pay at the expiration of the 30 days, the allocation will be automatically revoked and it will be offered to the bidder that came second in the bid round,” the official explained.
