March 2, 2024

FG issues 57 prospecting licences to AA Rano, Ardova Plc, 159 other indigenous oil firms

Oredola Adeola

The Petroleum Prospecting Licences (PPLs) have been issued to AA Rano Ardova Plc, Matrix Energy Ltd., Sun Trust Oil Company Limited, Deep Offshore Integrated Service Ltd. and 157 other successful 2020 marginal fields awardees and lease holders by the  Nigerian Upstream Petroleum Regulatory Commission (NUPRC), with the formal unveiling of the Host Communities Development Regulations(HCDR).  The unveiling and licences presentation was held on Tuesday in Abuja.

This is coming months after the awardees had offered several plea to NUPRC for the release of the licenses, which according to them, would give a clear insight into the development and finance of the oil field. The SPV companies, it was gathered, need the licences in order to be able to carry out due diligence on the field and hit the first oil.

EnergyDay’s check shows that some of the successful indigenous companies include  Island Energy Ltd. and Sigmund Oil Field Ltd., Shafa Exploration and Production Company Ltd., Emadeb Energy Ltd., Zigma Ltd., Inland Basin Ltd. and Petraco Oil Ltd., Duport Midstream, Genesis Technical, Twin Summit, Bono Energy, Deep Offshore Integrated, Oodua Oil, MRS and Petrogas among others.

Others are, North Oils and Gas, Pierport, Metropole, Pioneer Global, Shepherd Hill, Akata, NIPCO, Aida, YY Connect, Accord Oil, Pathway Oil, Tempo Oil and Virgin Forest, among others.

It was however revealed  that the 57 fields, spanning lands, swamps, and offshore presented in the 2020 bid round met the criteria of an ideal Marginal field. They were subsequently offered for bidding, out of which only 41 were fully paid for, while 37 fields were issued with the PPL having satisfied all conditions for award.

Out of the 665 entities that expressed interest in the exercise, 161 emerged as potential awardees, and later transformed into 57 Special Purpose Vehicle(SPV) companies.

Recall that the Marginal fields are undeveloped oil blocks located in acreages operated by the international oil companies(IOCs). They are typically to be developed by indigenous companies and have remained dormant for a period of over 10 years.

The fields that have now been issued out to indigenous participants in the oil and gas industry, is expected to increase the country’s hydrocarbon reserves, rev up technological transfer, attract investment and enhance revenue generation. Nigerian plans to ramp up daily production to three(3) million barrels a day and increase reserve to three(3) billion barrels

Dr. Timipre Sylva, Minister of State Petroleum Resources, at the unveiling and licences presentation said the maiden presentation of the PPL was part of the implementation of Petroleum Industry Act (PIA), 2021.

He described the successful completion of the process, which began in 2020, as a giant milestone ..

He said, “The implementation of the PIA 2021 is in top gear. Consequently, the new awardees should note that their assets will be fully governed by the provisions of the PIA 2021.

“While developing the assets with the special purpose vehicles (SPVs), ensure that good oilfield practice is employed, environmental considerations and community stakeholders’ management are not neglected.

“It is my strong belief that the awardees would take advantage of the current attractive oil prices to bring these fields into full production within a short period to increase production, grow reserves and reduce cost of production.

“The onboarding of new oil and gas players in the petroleum sector is part of this government’s policy to encourage more indigenous participation in our petroleum operations,’’ he said.

The Minister further revealed the development would boost activities in the oil and gas sector. He added that it would boost production output and create additional employment opportunities for Nigerians

Mr. Gbenga Komolafe, Commission Chief Executive (CCE) NUPRC, while encouraging the successful licencees to take advantage of the physical crude market, amid strongly rising commodity prices and a strong crude demand from refiners across the world to urgently bring their fields to production.

He however noted that the bidding process and conclusion were delayed due to issues including the COVID-19 interruption, partial payment of Signature Bonuses by some awardees, and the unwillingness of co-awardees to work together in forming SPVs for field development.

He said the marginal field’s award initiative began in 1999 and was borne out of the need to entrench the indigenisation policy of government in the upstream sector and build local content capacity. He noted that total of 30 fields had been awarded with 17 currently producing.

According to him, the 2020 Marginal Field Bid Round exercise in respect of which PPLs were being issued, had attracted government revenue of about N200 million and seven million dollars, respectively, adding that the PIA brought an end to the era of Marginal Field awards.

The CCE said, “Section 94 (9) of the Act states that no new Marginal Field shall be declared under this Act. Accordingly, the minister shall now award PPL on undeveloped fields following an open, fair, transparent, competitive, and non-discriminatory bidding process in line with Sections 73 and 74 of the Act,’’ he quoted.

Komolafe further said the impact of the upswing in the crude oil price was not reflecting in the nation’s revenue earnings due to disruptions in our national oil production owing to sabotage, theft, and other operational challenges.

 

Now that the licences and leases have been issued, EnergyDay gathered that the new development is expected to enhance the country’s economic growth, increase Gross Domestic Product (GDP) and create employment, while also avoiding the error of stranded assets.

The awardees are therefore expected to hit “first oil” in record time, since they have already obtained the technical knowledge on field development and operations amidst working agreement drafted for joint awardees and lease holders on the Farmout agreement and other technical enablers.
The SPV member companies therefore have the duty to perform, meet their cash call and  “first oil” in record time, under three years.