‘How marginal field awardees can thrive despite challenges’

Stakeholders yesterday, provided what may be considered leeway to the challenges awaiting the over 161 indigenous oil and gas companies that were recently awarded oil prospecting licenses by the Federal Government.

Vandalism, theft, growing insecurity, financial challenges in the face of the push from fossil fuels, community-related issues, technical problems and other bottlenecks had been projected to cripple expected goals of the licensing round.

Coming at a time when International Oil Companies (IOCs) are exiting the country due to the same reasons, stakeholders said the new oil field winners must do more to thrive.

Recall that the Federal Government had awarded 49 licenses to the companies, noting that the bid round, which generated over N204 billion in revenue, would assist the country’s aspiration of pushing crude oil production to about three million barrels per day while reserves would move to about 40 billion barrels.

Speaking on the development, especially the projected challenges, Matrix Energy Exploration and Production Company Limited said deploying its vast experience in the downstream sector of the petroleum industry to add value to its operations in the upstream industry.

Group Managing Director/Chief Executive Officer, Matrix Energy Group, Abdulkabir Adisa Aliu, one of the awardees said most of the awardees have been operating in the country, adding that his company would replicate experiences learnt in the downstream sector to avert some of the challenges.

“We are aware that the upstream industry is more challenging. But we are also aware that there are a lot of opportunities to contribute to the growth and development of the industry, in particular, and the country in general.

“As an oil-producing country, it is best for the operators to ensure they take advantage of the current rising price of crude oil at the International market by ensuring the country meets its production quota at all times.

“For us in the Matrix Energy Group, we will do our best to ensure we contribute significantly to the national oil and gas output and reserve aspirations, as well as the overall betterment of the country,” Aliu said.

Aliu said the bid round was satisfactory compared to the previous, adding that after paying the signature bonus, he said the decision by the government to select those companies that not only have the financial capacity, but also those that have done well and distinguished themselves with their technical capacities in their respective industries, made all the difference.

According to him, with three years given to the licensees to complete exploration work on the prospecting side of the license before going to mining and development, there is the need for awardees to do their best in ensuring that they bring value to the license as soon as possible.

Aliu said having gone through the first stage of completing the bid process and collecting the operating license, the company’s focus would shift to the field, to deploy its expertise and competencies to get to first oil as soon as possible.

Marginal fields are acreage carved out of existing permits of mainly International Oil Companies. In June 2020, the Federal Government put up 57 fields in a bidding process. Previously, 30 fields were awarded 17 currently in production.

Worried over the low crude oil output in the country, Chairman/CEO, International Energy Services Limited Dr Diran Fawibe said any output that would supplement what the country is getting from the bigger companies and the existing independent producers would increase the country’s production level.

He said there was a need for the awardees to learn from the successful companies that have been in marginal fields. With that, Fawibe believes that the challenges the new awardees would encounter would be well managed.

“They also need to make the oil-producing communities part of the development plan and engage them positively.

“Also there aren’t pipeline-related challenges. Pipeline vandalism is a major problem. We expect that the awardees will have learnt some lessons over the years in terms of how they can develop their fields and overcome these challenges,” Fawibe said.

One of the awardees and former President of Petroleum Technology Association of Nigeria (PETAN), Bank Anthony Okoroafor said the awardees would struggle if the government does not solve the challenges of crude theft, vandalism, and security of lives and properties as well as the general harsh business environment.

“It should be a national emergency given the contribution of oil to our economy,” Okoroafor said while stressing that “If we want this country to survive, if we want to be able to provide services, medical, education and other things for the populace, solving the challenges of theft and vandalism of pipeline must number issue.

Lamenting the dwindling crude oil production in the country. Okoroafor insisted that it is not the role of the oil companies to solve those issues.

He said the current bid round remained the most transparent, adding that some of the issues that affected the previous marginal fields licences have been addressed in the current process, including the forceful joining of companies.

Recall that in the first four months of this year, data from the Nigerian National Petroleum Company Limited showed that Nigeria was losing about 250, 000 barrels per day of crude oil to theft.

This did not only bring the total loss to about $1.5 billion but has become the possible biggest threat to national development and the environment.