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Why Marginal Fields Programme Failed

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The Federal Government in 2005 initiated the Marginal Fields Programme (MFP) to encourage indigenous participation in the oil and gas industry in Nigeria. This is after decades of monopoly by the Shell Petroleum Development Company (SPDC) and other international oil companies that came in later.

In a bid round that year (2005) for the 24 marginal fields, the federal government issued 30 licences; out of which only seven marginal fields have been developed and attained production, according to  the Managing Director of Treasure Energy Resource Limited,Dr Eddie Wikina,  a Rivers State-owned oil and gas company.

Wikina explained that with only seven developed marginal fields out of that number, it shows that MFP success rate was less than 30 per cent, therefore the full potential of the programme has not been achieved.

He noted that the objectives of the programme which were to increase Nigerian local participation in the industry and enhance economic growth have only been partially realised and it is not good, he added.

Variety of factors, according to Wikina were attributed to the failure of the MFP, one of which was basing award more on political and patronage considerations rather than on more business related issues. Some companies that were given these licences have father, mother and children as operators which have no know-how on oil business but were awarded marginal fields because they are related to one big politician or the other, he said.

Another factor that has made the MFP a failure is that the operators lacked technical competence, the knowledge of the operating environment, and business and no financial capacity to finance the business. Indigenous oil companies have not broken even in terms of attracting requisite funding and infrastructural capacity to explore these marginal fields. This has defeated the objective of increasing the participation of Nigerians in order to boost the economy of local areas and creating jobs, as the financiers were mostly foreign oil companies.

He explained that the seven functional marginal fields were headed by people with technical competence and financed by foreign companies. Citing Afren and Matt Resources as instances, he said Afren was a United Kingdom Company while Matt Resources was a Canadian Company and they provide technical and functional support  to operators of the functional marginal fields.

Others that have recorded success, he added, headed by technical professionals include platforms, Energia, Mid Western and Britannia-U.

‘Others are deficient in technical capacity. They basically have political patronage and this cannot bring oil from the ground. They are not ready to spend money on technical expertise but run on boards that are  based on family affiliations with no oil and gas experience’, Wikina explained.

He advised that during the next bid round, the Federal Government should play down on patronage and political sentiments and consideration should be given to qualified companies and indigenous persons from oil bearing states. This is the only way, he stated, that they can contribute to the economic development of the states and create jobs.

Explaining further he said an analysis of the current marginal fields awarded shows that only 30 per cent goes to the South South, 24 per cent to the North, 30 per cent to the South West and 15 per cent to the South East. In terms of the major oil blocs the South South which is where the oil is coming from,  has 13 per cent as its quota, North has 29 per cent, South West 30 per cent while the South East gets 19 per cent.

A further breakdown of the quota that goes to the South South shows that most of the ownership belong to those from Delta States while Rivers, Bayelsa and Akwa Ibom States are marginalised.

He urged the Governors of these three South South States to redirect their focus and walk together to see that this imbalance was addressed as this is denying the region  economic development.

He added that marginal field operators should be, based on the Nigerian Content Act, compelled to establish functional offices with decision authority within the state hosting the marginal fields or close to the areas of operations as failure to do this is denying the host states and areas of operations economic development.

He argued that thousands of jobs will be created in the Niger Delta  States which host oil fields if these offices are located within the states, and if dormant oil fields held by major oil companies were released for development and brought to production.

There is this trend that the oil majors and federal government have concentrated on the high-yields fields. For instance, experts are unanimous on the fact that Abia State’s oil and gas potentials were under-exploited as out of 103 oil fields, only about 50 are producing. The Abia case is applicable to most oil fields in the South South.

The TERL boss also pointed out that putting into consideration the suggestions could help address the current spate of militancy and insecurity in the country as it would ensure that the right environment is created to facilitate investment which results in economic growth.

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Oil & Energy

Nigeria In Trouble As Oil Price Crashes Below $20

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Oil price fell below $20 a barrel yesterday, after the International Energy Agency (IEA) said demand would slump by a record this year despite a historic production cut deal.
Futures fell as much as 4.5% in New York to the lowest since 2002.
Oil demand will drop by over 9 million barrels a day this year, wiping out a decade of consumption growth, the IEA said, exhausting storage by mid-year.
While Saudi Arabia and other Gulf producers have pledged to cut supply starting next month, they have continued to flood the market in April.
Stockpiles are rising everywhere and weakening key physical market gauges. New York oil futures moved deeper into contango, signaling an expanding glut, while swap prices indicate North Sea cargoes are trading at bumper discounts.
Oil has lost about two-thirds of its value this year as countries extend their coronavirus lockdowns, death tolls mount around the world and unemployment explodes in America.
The International Monetary Fund (IMF) estimated the global economy will shrink 3% this year, a signal that energy demand may remain weak, while the IEA is warning that the worst may be yet to come.
“We may see further downward pressure on prices in coming days and weeks,” IEA Executive Director, Fatih Birol, said.
The IEA said consumption in April will fall by almost a third to the lowest level since 1995, and make this year the worst in the history of the oil market.
Despite OPEC+’s efforts to balance supply, global inventories will accumulate by 12 million barrels a day in the first half of the year and “overwhelm the logistics of the oil industry” in the coming weeks, it warned.
The massive OPEC+ deal to cut production starts next month. Until then the battle for market share persists with Abu Dhabi cutting its crude pricing for Asia. It follows a similar move by Saudi Arabia earlier in the week.

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NUPENG Lauds Members Over Petrol Supply Amid Lockdown

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The National Union of Petroleum and Natural Gas Workers (NUPENG), has commended its members on essential services for ensuring uninterrupted supply of petroleum products to every nooks and crannies of the country during the lockdown occasioned by the Coronavirus pandemic.
The union, however, decried the harassment and intimidation of oil company workers by security agents, calling on oil companies and the Department of Petroleum Resources (DPR) to provide adequate security passes for the workers.
NUPENG in a statement by its President and General Secretary, Prince Williams Akporeha and Olawale Afolabi, respectively, said petroleum tanker drivers, petrol station workers, petroleum products depot workers, oil and gas suppliers, and  liquefied petroleum gas retailers, had  made NUPENG and the  entire labour movement proud  as they moved through difficult and dangerous situations to ensure fuel supply to Nigerians.
The statement read in part: “The leadership of NUPENG has reviewed the roles of our members in the frontline in this critical period as Nigerians fight to contain the spread of the deadly and contagious coronavirus pandemic and we are proud to say our members on essential services have made us proud.
“In fact, not only have they made NUPENG and the United Labour Congress of Nigeria proud, our petroleum tanker drivers and others have made the entire labour movement proud by continuing to ensure uninterrupted supply of petroleum products to every nooks and crannies of the country despite the difficult and sometimes, dangerous situations as most states across the country are on lockdown.
“Once again, we appeal to state governments, security agents and Nigerians in general to cooperate with members of our unions who are risking their lives to provide essential services in the nation.”
NUPENG also appealed to corporate organisations to provide sanitisers and other safety kits to members of the union on essential services, to protect them and members of their families.
It stated: “We want to use the opportunity to call on oil companies and the DPR to provide adequate pass to our members on essential services to end the harassment and intimidation they are being subjected to by security agents across the country.”

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Oil & Energy

FG Releases N200bn To Improve Power Sector 

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Group Managing Director of Nigerian National Petroleum Cooperation (NNPC), Mr Mele Kyari, says the Federal Government has made payment of over N200 billion to the power sector towards improving electricity supply in the country.
Kyari disclosed this while speaking with newsmen in Abuja, yesterday, shortly after a closed door meeting between the NNPC team, Minister of Power, Mr Sale Mamman and Managing Director of Transmission Company of Nigeria (TCN), Mr Usman Mohammed.
“Actually the Federal Government has made payment of over N200 billion for power in the last 23 days and this will go a long way to ensure that issues around power supply are addressed.
“We will work as a team to ensure that all issues are settled”, he said.
Kyari said that the team was in the Ministry of Power to inform the minister that in the last one or two months and particularly during the COVID-19 period, NNPC has increased gas supply to the power sector.
According to him, there will be significant improvement in power generation in all Federal Government and associated power facilities.
“This also means that Nigerians will get better access to power during this lockdown period and going forward.
“There are issues around power supply process and we have discussed most of them and we are moving as a team to make sure that we resolve issues around payment and evacuation.
“We are very confident that this will get the desired result. We will visit some power plants tomorrow to make sure that we sort out any issue to ensure that Nigerians have access to better power,” he said.
He said that the minister was very clear on what was to be done to improve power supply.
“We will make sure this becomes transparent and obvious to all Nigerians,” he said.
On his part, TCN Managing Director, Mr Usman Mohammed said that the meeting was to ensure that there was constant supply of power as directed by President Muhammadu Buhari.
Mohammed said that the President has directed that there should be constant power supply to the people during the COVID-19 lockdown.
“This is why this meeting was conveyed by the Minister of Power to discuss supply of gas to the power plants.
“This is very important, before now, we have been discussing with NNPC, of course there is gas availability in the market but there are several power plants that don’t have gas and that is a big problem for us.
“With this meeting where the minister prevailed that NNPC should assist in suppling gas to the power plants, we believe that will have steady and sustainable power supply going forward especially during the COVID-19 lockdown, “ he said.

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