Operators May Generate N4.37trn From Marginal Oil Fields

Operators of the new marginal oil fields are expected to earn significant revenue from the fields.

Proposed crude oil exploration from 57 marginal oil fields is expected to boost Nigeria’s oil production by at least 8.835 million barrels monthly.

With the newly issued marginal field licences, the country’s oil production is expected to grow by 285, 000 barrels per day, going by the estimated 5,000bpd output projected for each field.

As a result, operators of the new marginal oil field licences are estimated to rake in at least N364bn ($883,500,000) monthly if the oil price remains stable above $100/barrel for a long time. Already, experts have predicted that oil prices may remain above $100 per barrel zone over the next one year.

Going by the analysis, the operators of the fields may rake in about N4.368tn in a year in the absence of external factors such as the activities of oil vandals, and production shutdown, among others.

However, the additional 8.835 million barrels per month is expected to go a long way in boosting the nation’s oil production.

A marginal oil field is described as any field with oil and gas reserves, booked and reported annually to the Nigerian Midstream and Downstream Petroleum Regulatory Authority, but remains explored for a period of over 10 years.

The marginal oil field programme was introduced to encourage increased indigenous participation in the Nigerian petroleum sector and grow the country’s crude oil and gas reserves.

Each field is expected to produce at least 5000 barrels of oil per day at the initial exploration stage.

However, it is expected that production could grow to 10,000b/d and as high as 25,000b/d, depending on the viability of the field and the readiness of investors to pump in more funds.

The Federal Government has been yearning to see the nation’s oil reserves and daily production rise to 40 billion and three million barrels respectively.

The government believes the 57 marginal oil fields won last year by 161 companies will boost the nation’s reserves and production.

The 2020 marginal oil field bid round started in June of the same year. In May, 2021, 161 companies were shortlisted as winners of the 57 marginal fields which were put on offer.

The offers spanned onshore, swamp and shallow water. The marginal oil field licences were handed over to the winners of the bids last month by the Nigerian Upstream Petroleum Regulatory Commission.

Some of the companies which emerged winners from the exercise included: Matrix Energy, AA Rano, Andova Plc, Duport Midstream, Genesis Technical, Twin Summit, Bono Energy, Deep Offshore Integrated, Oodua Oil, MRS and Petrogas.

Others were: North Oils and Gas, Pierport, Metropole, Pioneer Global, Shepherd Hill, Akata, NIPCO, Aida, YY Connect, Accord Oil, Pathway Oil, Tempo Oil and Virgin Forest, among others.

However, despite efforts to encourage indigenous players, marginal oil fields are yet to make any significant impact in the Nigerian oil and gas industry and are currently accounting for less than four per cent of the country’s crude oil output.

Experts have said Nigeria’s low crude oil output is putting a strain on its revenue and ultimately the country’s general economy that relies heavily on revenue from oil.

In 2003, twenty-four marginal fields were allocated to 31 indigenous companies, however, as of 2016; only seven were producing, contributing approximately one per cent to Nigeria’s daily oil production.

Exactly a decade after the award of the first programme, another licensing round was announced in 2013 with 31 fields on offer.

The country has also consistently missed its OPEC quota due to low crude oil production.