Marginal oilfields in Nigeria
Marginal oilfields operators are angling for additional fields, whenever the next licensing round for marginal fields takes place. This suggests that indigenous oil companies are gradually developing the competence required to grow the industry.
Marginal oilfields in Nigeria are mostly those fields abandoned by international oil companies (IOCs), for their low oil reserve capacity, which is about 10,000 barrels per day, or less.
For now, the marginal fields development programme, which was introduced by the government to encourage indigenous participation and build indigenous capacity in the upstream sector of the oil and gas industry, is apparently far from achieving its primary objective of reducing the rates of abandonment of depleting fields and increase the country’s oil and gas production capacity and reserves base.
Operators of these marginal fields have been able to enhance the productivity of these fields; others have demonstrated their willingness to enlarge their asset base and graduate to the next level, as independent producers. Operators that are able to produce 10,000 barrels and above cease to be marginal field operators. To this effect, they are not taking chances as they are not ready to allow any opportunity that comes their way to slip off their hands.
All this is a testimony to what Nigerians can do if given the right opportunity and the right environment. And, perhaps, this is the reason a number of them are seeking to get listed on Alternative Investment Market (AIM) in London so that they can access financial opportunities and technical partners that have gathered experience over the years in other places.
Lately, companies like Lekoil, Eland and Heritage, just to mention a few, have listed on AIM. It has been discovered that the aspiring investors are fine-tuning their strategies to ensure that they succeed in the bid round whenever the presidency gives the go-ahead for it to take place. A lot of technical details are being put in place on the fields in which they are interested.
The first marginal fields licensing round, which was held in February 2003 and in which 24 licences were awarded, brought smaller indigenous players into the upstream sector of the industry.
Of the 24 licensees that were awarded marginal oilfields, only nine have started production. These include Umusadege being operated by Midwestern Oil & Gas Company; Asuokpu/Umutu by Platform Petroleum Limited; Ibigwe by Waltersmith Petroman Oil Limited; Umusati/Igbuku by Pillar Oil Limited; Obodugwa/Obodeti by Energia Petroleum/Oando; Ajapa by Britannia U; Ebok by Oriental Energy; Ogbelle by Niger Delta; and Uquo by Frontier Oil.
The Ibigwe marginal field, being operated by Waltersmith Petroman Oil, is said to have gulped over $180 million in investment so far. The development of the first phase of the field was recently completed.
A $23m loan received from Union Bank was the lifeline that made Brittania-U, operator of Ajapa field, the first marginal field operator among those with fields within the shallow waters to bring its field into production. In November 2010, the company completed a $30 million buy-out of its foreign partner Syntroleum’s 40 percent stake, which made it assume 100 percent ownership of the block.
Aside from these investors, others that were awarded under a different scheme that have been producing and are also interested in the bid round are Okwot and Ebok to Oriental Energy, Ogbelle to the Niger Delta Development, Otakikpo and Ubima fields to Green Energy Ltd and Allgrace Energy Ltd, respectively.
Though many of those marginal field operators have achieved some level of success in production of crude oil, we are still far from what is expected and can be achieved.