Analysts have predicted that the allocation of marginal oil fields will boost domestic oil production and increase the participation of indigenous oil firms in Nigeria’s upstream sector.
The analysts at Financial Derivatives Company Limited (FDC), stated that the $500 million that would be earned by the Nigerian government from the deal will also boost external reserves.
“For the oil industry, the allocation of the unproductive oil fields signals possible resumption in production activities. This will increase indigenous participation in the upstream sector and boost domestic oil production,” the analysts led by Bismarck Rewane noted in FDC’s economic review.
The analysts noted that the technical capability of the indigenous companies, legal challenges, delay in deregulation of the oil sector and insecurity at some of the oil fields is a major deterrent to the development of the newly awarded marginal oil fields.
They, however, noted that the last bid round conducted in 2003 was fraught with litigations and other challenges, which hampered the development of about 24 marginal oilfields that was awarded then.
READ ALSO: Despite Efforts Poverty, Injustice Still Ravage Nigeria – Okorocha
According to them, out of the 24 fields awarded, only 13 are producing, invoking criticism that some companies that won are not equipped to develop them.
BizWatch Nigeria had two weeks ago reported that the federal government announced the conclusion of the bid round for the award of 57 marginal oilfields, won by 161 of the bidding companies.
The 161 successful bidders emerged from a pool of over 600 indigenous oil companies that jostled for the 57 marginal fields in the process that commenced in June 2020.
The Minister of State for Petroleum Resources, Chief Timipre Sylva, told journalists that letters informing the winners of the outcome had been sent out.
He added that the winners have started paying their signature bonuses.
He stated that the federal government had received almost 50 per cent of the signature bonuses.
“The process has been concluded. Letters have gone out and people have started paying their signature bonuses. We have received almost 50 per cent of signature bonuses already.
“One hundred and sixty-one companies were allocated marginal fields and I will not give you the details of how many have paid. I’ve told you that up to 50 per cent of those winners have paid,” Sylva said.
He described the bidding process as the best in terms of transparency and that assessment of bidders was done by competent consultants.
