FG generates over N202 billion, despite 13 marginal fields being dormant

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Despite failing to meet its crude oil production goals for both domestic and export markets, Nigeria’s government still made N202.91 billion from the recently concluded 2020 marginal field bid round.
On Tuesday, the government disclosed that 13 of the 30 marginal fields awarded since 1999 are not currently operational and are therefore not producing crude oil.

The government claimed that during the period under review, 57 marginal fields in Abuja were awarded to about 49 new investors while the remaining 17 marginal fields were managed.

Despite failing to meet its crude oil production goals for both domestic and export markets, Nigeria’s government still made N202.91 billion from the recently concluded 2020 marginal field bid round.
On Tuesday, the government disclosed that 13 of the 30 marginal fields awarded since 1999 are not currently operational and are therefore not producing crude oil.

The government claimed that during the period under review, 57 marginal fields in Abuja were awarded to about 49 new investors while the remaining 17 marginal fields were managed.

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The government reportedly made this disclosure when issuing petroleum prospecting licences to the winners of the 2020 marginal field bid round. It claimed that this was done in accordance with the Petroleum Industry Act of 2021.

Successful awardees, including Matrix Energy Group and Petrogas Energy, among others, promised to start oil exploration from the fields in earnest to increase the nation’s crude oil production as the event was taking place.

The need to complete the 2020 bid round was one of the major tasks the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) inherited upon its establishment last year, according to Gbenga Komolafe, the NUPRC’s Chief Executive Officer, who spoke at the event.

Because of this, he said, “we pursued the matter head-on and are delighted to inform you that the exercise which began in June 2020 is being concluded today.”
According to Komolafe, the marginal fields award initiative dates back to 1999 and was inspired by the need to solidify the government’s indigenization policy in the upstream oil and gas industry and develop local content capability.

Additionally, the initiative aimed to increase capital inflow into the industry and create job opportunities.

“Since the program’s inception, 30 fields have been awarded, with 17 of those producing right now. Following is a breakdown of the fields awarded to native operators: two in 1999, 24 in 2003/2004, one each in 2006 and 2007, and two in 2010.

“In 2020, 57 fields were put up for auction ten years later. Remarkably, the 2020 marginal field bid round exercise for which PPLs are being issued today generated government revenue of about N200 billion and $7 million (or N2.91 billion at the official exchange rate of N415.64/$), respectively, Komolafe said.

Group Chief Executive Officer of Matrix Energy Group, Adisa Aliu, said in his statement that successful bidders would immediately start an oil search.

He emphasised that the contributions of marginal field operators would significantly increase the monthly oil demand and help Nigeria meet the required quota set by the Organization of Petroleum Exporting Countries.

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“We are happy that this exercise is over, and we are prepared to contribute our fair share in helping Nigeria meet the target approved for her, as well as help in raising revenue for our country,” he said.

However, he made the point that security in the Niger Delta needed to be improved because it had been difficult to advance the industry meaningfully as well as to produce crude oil.

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