Price Waterhouse and Coopers [PwC], a leading advisor in Nigeria’s oil and gas industry, has asked the new group of marginal oilfield licence winners to seek innovative financing structures s in order to address the country’s low crude oil production.
The submission was made at PwC’s stakeholders forum, ‘Marginal Oilfield Licence: After Winning, What Next?’ in Lagos recently.
The partner, Energy, Utilities and Resources and Africa oil and gas leader, Pedro Omontuemhen, said he believes that many new marginal oilfield license winners are thinking of moving ahead quickly in the journey to First oil, than developing a marginal oil field that capital-intensive.
The chief executive officer of the Nigerian Upstream Petroleum Regulatory Commission, Mr. Gbenga Komolafe, emphasised that the Petroleum Industry Act was phasing out the marginal field regime with the objective of equalising all oil and gas producers in Nigeria.
“The NUPRC is willing to support any innovative financing arrangements that the INDUSTRY is evaluating and mediate any disputes among licence holders,” he said
Sharing his experience as an established operator, Executive Vice Chairman, ND Western Limited, Dr Layi Fatona, advised new marginal oilfield awardees to manage their cost profile and focus on long-term success.
He explained that partnerships are vital to achieving first-oil production in a timely manner, advising marginal operators to prioritize human capital development and strategic partnerships.
Head Client Relations, Anglophone West Africa, AfreximBank, Peter Olowononi, noted that based on clearly defined risk management policies and procedures, the standard practice is to finance projects that are producing oil and gas.
He, however, said Afrexim Bank recently adopted a different approach by working with some marginal field operators on a guarantee-backed facility based on technical expertise provided by competent oil service companies along with the equity contributed by the awardees.
On her part, the Managing Director and Co-founder of Subdrill Services Limited, Aysha Abba, highlighted the need for marginal field licence holders to demonstrate the commercial viability of their crude reserves in order to attract finance.
“Going the extra mile by working with reserve evaluators to generate a Competent Person’s Report can make a huge difference when seeking finance or strategic partnerships”, she said.
She recommended that the marginal field awardees should engage industry-recognised experts to prepare field development plans, and evaluate financing options.