Energy & Corporate Africa
Investors yearn for Nigeria's Marginal Fields as the Country Prepares for Road Show
By Sunny Oputa
Nigeria is a prolific and lucrative market for oil and gas investment amid some security risk which has started to pacify. Enriched with abundant mineral resources, harnessed and yet to be fully harnessed, this most populated African country, which is a significant OPEC producers and number 1 in Africa has been struggling for the past two years in maintaining its strategic crude oil production level of 2.5 MBD.
On several months, it has lost its number one status in the region to Angola, another heavy hitter in the region that also suffers the same issue of wobbling or plunging production level.
The problem of plummeting production has greatly affected the revenue of both nations. Despite all odds, the country remains attractive to investors and operators struggling to get a bite from the cake.
While Nigeria has ascribed its plunging and wavy production levels to incessant militant attacks that destroyed pipelines, distorted production, bunkering and oil theft, the country continues to push to biff up production, accelerate economic recovery and balance its revenue. Enjoying the blessings of OPEC which empowers it not to cut production like other OPEC member nations in order to revamp the global collapsing price of crude oil, Nigerian government is depending on the licensing of some marginal or stranded fields in the country as a way to up production and spike national revenue.
Next week in Houston, Nigeria’s minister of State for petroleum Resources, Dr Ibe Kachikwu will commence a road show in Houston to promote the upcoming marginal field licensing round which could linger from 2018 – 2019. Investors and operators are very expectant and looking forward to the opening of this new vista.
Some facts are clear that while Nigeria pushes to attract credible investors, the country would continue to seek to promote local content whereby local operators would be encouraged to seek for international technical/commercial partners and also encourage local entrepreneurs who can do it on their own to be welcomed to the turf.
The country is eager to develop its gas assets, especially gas –to-power. Nigeria has been bedeviled with lack of adequate electricity for its teeming population. Companies willing to grab marginal assets must show to the government that they have facilities to produce, transport, and store and utilize gas. They must be willing not only to sell the gas to DISCO, but first to use it to power the communities and extend its electrification to nearby grid.
As time is of very essence to ensure the desired economic recovery and goals, the government will be more interested in companies that would show ability to start exploring and producing within 3 -5 years. Delayed production or activities that last more these enumerated years might not be tolerated and with the way things are going with the government, operators who delay to launch activities might experience license suspensions.
Fast tracked development of marginal fields has always been a problem to some local marginal field and independent operators. New technologies and modern economics have shown that there are less costly ways to produce these fields efficiently and in a timely manner.