Stakeholders forum with the theme: ‘Marginal Oilfield Licence: After Winning, What Next?’ was held for winners of marginal Field oil field licenses and it witnessed a good turnout of industry players.
According to Pedro Omontuemhen, Partner, Energy, Utilities & Resources and Africa Oil and Gas Leader at PWC, the company that hosted the event, in his opening remarks explained the rationale behind the PwC’s oil and gas stakeholders forum:
He said: “We organised this event at a pivotal moment in the industry. Several new marginal oilfield licence holders who won the recent bid round are keen on moving ahead quickly in the journey to first oil. We aim to foster collaboration by bringing established industry operators to share their experiences and discuss best practices to enable the new players to succeed.
He stated that developing a marginal oil field is a capital-intensive project. “Post the euphoria of winning, the next focus for new marginal oil field operators is to figure out how to achieve first oil production quickly whilst setting up a sustainable structure. We have financiers, producing marginal operators and other stakeholders in the room to provide insights on how to achieve this objective.”
In his own remark at the event,Dr Kelechi Ofoegbu, Executive Commissioner, Economic Regulation and Strategic Planning, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), who represented Engr. Gbenga Komolafe, Chief Executive Officer of NUPRC, spoke the mind of the Regulator. He emphasised that the Petroleum Industry Act (PIA) is 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..
Sharing his experience as an established operator, Dr Layi Fatona, Executive Vice Chairman, ND Western Limited, advised new marginal oilfield awardees to manage their cost profile and focus on long-term success.
He said partnerships are vital to achieving first-oil production in a timely manner. He advised marginal operators to prioritise human capital development and strategic partnerships.
Peter Olowononi, Head Client Relations, Anglophone West Africa, AfreximBank, noted that based on clearly defined risk management policies and procedures, the standard practice is to finance projects that are producing oil and gas. However, the 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 awardee.
Aysha Abba, Managing Director and Co-founder of Subdrill Services Limited 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 (CPR) can make a huge difference when seeking for finance or strategic partnerships. She recommended using industry-recognised experts to prepare field development plans, evaluate financing options etc.
Other additional takeaways include:
- Stakeholders highlighted the need for a regulation that provides clarity and certainty to the burning issues facing marginal field companies;
- With the difficulty in sourcing funds internationally, marginal field companies are urged to focus on local market to raise finance
- Marginal field companies should ensure the Special Purpose Vehicles (SPV) to be adopted for their operations are structured in a tax and regulatory optimal manner; and
- Marginal field operators should incorporate an ESG action plan into their operations to ensure easy access to scarce international funding.
