Despite huge potential, a report from Nigeria National Petroleum Corporation (NNPC) has revealed Nigeria’s marginal fields’ accounts for just six percent of Africa’s biggest oil-producing country’s total oil production of 60.00million barrels of crude oil & condensate representing an average daily production of 1.94million barrels.
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Marginal fields are oil fields that have been discovered by major international oil companies (IOCs) in Nigeria in the course of exploring larger acreages and which fields have not been developed for more than 10 years.
An investor’s guide to Marginal Oil field acquisition says Nigeria has an estimated 2.3 billion barrels of crude oil reserves in over 183 fields classified as marginal however despite these potentials, Marginal field still contributes miserly to Nigeria’s total production.
According to data from NNPC, out of May 2019 total Production of 60.00million representing an average daily production of 1.94million barrels, Production Joint Ventures (JVs) and Production Sharing Contracts (PSC) contributed about 28.99 percent of 17.4 million barrels and of 45.40 percent of 27.2 million barrels respectively. While Alternative Funding (AF), Nigeria Petroleum Development Commission (NPDC) and marginal fields operators accounted for 10.77percent of 6.5 million barrels, 8.12 percent of 4.8million barrels and 6.71percent of 4 million barrels respectively.
“When you look at the market the feeling is that the money is not there so who will develop those fields? LuqmanAgboola head of infrastructure at Sofidam Capital Limited asked.
Data gathered from the Department of Petroleum Resources (DPR) revealed only 9 marginal fields are currently producing from the 30 fields awarded during the last bid rounds.
The active fields according to DPR includes Egbaoma oil field, owned by Platform Petroleum Ltd; Ibigwe oil field owned by Walter Smith Petroleum Ltd/Morris Petroleum Ltd; Uquo oil field owned by Frontier Oil Limited; Ajapa oil field owned by Brittania-U Ltd; Umusadege oil field owned by Midwestern Oil & Gas/ SunTrust oil & Gas Ltd; Ebendo oil field owned by Energia Limited/ Unipetrol Pet. Development company; Umusetti oil field owned by Pillar Oil Limited; Ebok oil field owned by Oriental Energy Resources Ltd, and Ogbelle oil field owned by Niger Delta Petroleum limited.
“Perhaps owing to lack of experience and due to the fact that it was the first marginal field licensing round, some of the licensees entered into financial and technical arrangements with foreign partners without proper due diligence which, in turn, failed to bring some of the aspirations of the licensees to reality,” Bloomfield law Practice Investors Guide note on Marginal fields bid round said.
“It is very important that the local awardee carries out extensive due diligence on its intending partner, on the level of their technical and financial ability, as this will in most cases determine the success of their venture,” Bloomfield’s Investors Guide note said.
