Nigeria Raises $477m from Marginal oilfield Licences

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Finally, Nigeria has dispensed with the orchestrated marginal field, issuing licenses to develop Margin in Nigeria. Bloomberg reported yesterday evening that Nigeria had raked in as much as $477million from the exercise.

Marginal fields include fields with reported reserves and production potential, and listed as marginal for a number of reasons. Marginal fields include Oil Mining Leases (OML).

The processes had suffered several setbacks, including multiple litigations from locals in oil producing areas. The initial verdicts from law courts restrained the Nigeria authorities from going on with the auctioning.

The Bloomberg report said the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) issued a total of 49 petroleum prospecting licenses to more than 100 companies, compared to the original 57 bids it was seeking 2 years ago.

The agency’s chief executive, Mr. Gbenga Komolafe, said that the field sales “raised more than N200billion ($477million), adding that the FG hopes the sales help boost Nigeria’s declining output.

Investigations reveal that each awardee was asked to pay a total of N48billion (as fees and bonuses) to gain access the license, resulting in combined revenue of N2trillion for the federal government.

The N48billion include: N500,000 registration fee, N2million application per field, N3million bid processing fee, data prying fee of $15, 000 per field, data leasing fee of $25, 000 per field, competent persons report fee of $50, 000 per field, and $25, 000 per field for field specific report.

Last Saturday, the NUPRC confirmed the issuance of the Petroleum Prospecting Licences to successful awardees of the fields yesterday (Tuesday). The development came one year after the licences ought to have been issued.

Nigeria is currently facing low oil production and repeated failures to meet production quotas, situation observers have attributed to low investments in the upstream, among other issues.

Experts say that issuance of the marginal field license has been unduly delayed, and it is most likely contributing to Nigeria’s inability to meet production deadlines.

“If the licences had been issued earlier, the winners would have started work; this would have added to the dwindling oil and gas production of the country. Some of these awardees would have also taken loans.

“And don’t forget, Nigeria’s currency has witnessed serious devaluation and, as such, most of them may not be able to afford paying up. Some of them would have even paid back the loans, while some would have moved on to other businesses,” an industry source said.

By Chibisi Ohakah, & Chidi Ekpewerechi

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