Lack of funding leading to underutilization of leases and government inaction in conducting bid rounds are holding back investments in Nigeria’s 200 marginal fields, which many oil analysts say could truncate the country’s quest to increase its crude oil production and revenue.
According to the Nigerian National Petroleum Corporation (NNPC), Nigeria has about 200 oil fields branded as marginal due to location and distance to existing facilities and low ranking in the investment portfolio.
Out of the 200 oil fields, only 30 with an estimated reserve of about 300 million barrels of crude were granted licenses by the Department of Petroleum Resources (DPR).
Marginal fields, specifically, refer oil field that may not produce enough net income to make them worth developing at a given time, which made the international oil companies (IOCs) that discovered them keep them idle since they do not meet up their investment thresholds and corporate size.
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Since their very small sizes of reserves do not elicit interest from the IOCs, the Federal Government decided in 2004 to award 30 them to local and small companies.
However, out of the 30 fields so awarded, only nine (9) are set to be active, according to data gathered from the Department of Petroleum Resources (DPR) website, which, according to analysts, may reduce the potential production from the fields put at about 2.6 percent of daily oil production and 2.5 percent of the estimated 4,000 million standard cubic feet per day (MMSCFD) gas productions in the country.
The active fields as contained in DPR website include Egbaoma, owned by Platform Petroleum, Ibigwe (Walter Smith Petroleum), Uquo (Frontier Oil Limited), Ajapa (Brittania-U Limited), Umusadege (Midwestern Oil), Ebendo (Energia Limited); Umusetti (Pillar Oil Limited), Ebok (Oriental Energy), and Ogbelle (Niger Delta Petroleum).
Analysts say, the non-utilisation of the already awarded fields may have to do with funding, technology, and experience gaps, and that rather than using local or foreign experts, some of the marginal fields’ operators still resort to the use of the trial and error method of restructuring.
Experts say each of the marginal fields has an average capacity of 5,000 bpd, which means the idle 21 fields could produce about 115,000 (barrels per day) bpd of crude oil.
To this end, both analysts are calling on government to conduct blocks and marginal bid rounds to allow operators with the capacity to explore and share with the government as well as incentivise people to come and explore new areas.