16 OLD BLOCKS ALLOTEES RISK LOSING LICENCES

Sixteen out of the 28 oil blocks whose licences were issued through the 2003 marginal bid round programme are at the risk of being revoked for remaining unproductive since then. It was learnt that already, the Department of Petroleum Resources (DPR) had given a March 2015 deadline to all unproductive marginal oil blocks owners to develop them or they would lose their licences.

Three months to the expiration of the deadline, some of the owners, sources said at the weekend, had intensified efforts to escape the hammer. A source at the Ministry of Petroleum Resources, however, said the owners of the marginal fields, “some of who are politicians and those close to government,” have begun scheming to avert the DPR axe. “It is normal for them (marginal oil blocks owners) to lobby government to avert the revocation of their licences.
Don’t forget that they made a lot of investments in these blocks, but the bottom line is that things have to be done and have to be done right. “They have been given a 10-year deadline to make these oil blocks productive. This 10-year window was also extended when they could not meet up.
It is this new extension that will expire by March 2015, which is barely three months away. “The question of whether the DPR will be able to go ahead with its threat or not would be addressed soon but what I can confirm to you is that there is a serious scheming going on now to stop the DPR by getting another extension of deadline,” he said.
Director of DPR, Mr. George Osahon, told New Telegraph that the government understood challenges of funding and technology facing marginal field operators, but there was no going back on the March 2015 deadline “Non-producing marginal fields would be withdrawn from the operators in March 2015, unless reasonable commitment is ascertained by the government,” he said on the sideline of a conference in Lagos.
Acknowledging that the government was aware of the challenges facing the operators in the areas of funding and technology, Osahon added that the government was also concerned about the inability of the operators to meet government’s objectives of bringing the fields to production. He urged the operators to form cluster groups, where possible, for the development of the assets. According to him, a total of 28 marginal fields were awarded to indigenous companies in Nigeria “We have a deadline of March 2015 for those that have held marginal fields since 2003.
The 10 years given to them have elapsed. The fields will not be allowed to remain like that forever. It is not to punish them,” he said. However, the sixteen unproductive marginal fields have suffered further abandonment as the oil price rout rocking the global crude market hit harder on the marginal fields’ production and assets.
Global exploration projects worth more than $150 billion are also likely to be put on hold next year as plunging oil prices render them uneconomic. The marginal field programme is an offshoot of the Federal Government’s policy to promote indigenous participation in the upstream sector of the petroleum industry but checks by New Telegraph showed that the ongoing crude price fall has made further investments in them to be unattractive.
“Just eight of the 28 fields awarded in 2003 are currently producing, with over 40 new wells drilled by the awardees, representing a four-fold increase. But the bad news is that the price fall has made investments in the eight fields unattractive and works on the remaining 16 unproductive fields to be non-lucrative,” an industry source said. It was also gathered that the ongoing price fall has also become a setback to the 2013 new marginal field bid round, which has been unofficially delayed.