Oil & Energy

Why Marginal Fields Programme Failed

Published

12 years ago

April 22, 2013

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.

Oil & Energy

Reps Launches Probe Into N200bn CBN Loan To DISCOs

Published

12 hours ago

May 12, 2025

The Tide

The House of Representatives has launched an investigation into the disbursement and utilisation of the N200billion Central Bank of Nigeria (CBN) loan allocated for the National Mass Metering Programme (NMMP) to Electricity Distribution Companies (DISCOs).
Chairman, House Committee on Public Assets, Rep. Uchenna Okonkwo, disclosed this in a statement in Abuja.
He confirmed that a 19-member sub-committee had been inaugurated to probe the matter thoroughly.
Okonkwo recalled that the NMMP, initiated in 2020, was designed to provide free electricity meters to Nigerian consumers through the Licensed Electricity Distribution Companies (DISCOs).
He said the programme was a joint initiative of the CBN, the Nigerian Electricity Regulatory Commission (NERC), and other stakeholders in the Nigerian Electricity Supply Industry (NESI), aimed at eliminating estimated billing, improve transparency in energy usage, and enhance customer satisfaction.
Speaking on the launch of the NMMP, the Rep said the programme was to be implemented in three phases to ensure the reduction of collection losses and improve market remittances in the industry.
“Under the pilot phase of the programme’s implementation, CBN commenced with the sum of N59.280 billion for procurement and installation of one million meters in 2020 at an interest rate of 9 per cent after a two year moratorium.
“Preliminary research on the NMMP has shown that instead of the pronounced amount of N59.280 billion naira for the phase 0, what was released was N55.4 billion for procurement and installation of 962,832 meters instead of one million meters pronounced by CBN”, he noted.
Okonkwo stated futher that concerns have been raised regarding repayment, with the committee noting discrepancies in the repayment of the funds by the DISCOs.
According to Okonkwo, “Research has also shown that the eleven Electricity Distribution Companies who received the loan have paid back to CBN as refund for the N54.4 billion they received in 2020 without mentioning the 9 per cent interest on the loan.”
The lawmaker, however, said the subsequent phases of the programme, which were expected to significantly expand metering across the country, have stalled, explaining that Phase 1, which was to be funded by the CBN and Deposit Money Banks (DMBs) for 1.5 million meters, and Phase 2, expected to be financed by the World Bank for four million meters, are yet to take off.
He said the House, exercising its constitutional powers under Sections 88(1) and (2) of the 1999 Constitution, resolved to investigate the matter with a view to safeguarding public interest.
According to him, the sub-committee is expected to scrutinise all aspects of the NMMP funding, from disbursement and meter procurement to distribution and repayment mechanisms.
The 19-member committee comprises Reps. Obed Shehu, Ali Shettima, Abel Fuah, Salisu Koko, Ahmed Munir, Sani Umar Bala, Gbefwi Jonathan, Abdulmaleek Danga, Chinedu Obika, and Okunlola Lanre.
Others include Reps. Abass Adekunle, Akinosi Akanni, Obuzor Victor, Peter Akpanke, Ngozi Lawrence, Ogah Amobi Godwin and Ikeagwuonu Onyinye.
It would be noted that the NMMP was expected to be a game-changer in Nigeria’s power sector by reducing estimated billing, enhancing energy accountability, and restoring consumer trust.
However, the current revelations point to implementation failures and possible mismanagement of public funds.
Analysts believe that the outcome of the House probe could lead to reforms in electricity metering policy and strengthen regulatory oversight of loan disbursements to DISCOs.

Oil & Energy

“Renaissance Energy, NNPC JV Donate ICU Equipment To RSUTH

Published

12 hours ago

May 12, 2025

The Tide

Renaissance Africa Energy Company Limited and its joint venture partners, including the Nigerian National Petroleum Company Limited (NNPC), have donated vital medical equipment and essential drugs to the Intensive Care Unit (ICU) of the Rivers State University Teaching Hospital (RSUTH).
Among the equipment are three ventilators, a laser therapy machine, as well as significant supply of seed stock drugs targeted at enhancing the hospital’s capacity to provide critical care and ensuring consistent drug availability.
Speaking at the Handover Ceremony at Renaissance Energy Headquarters, in Port Harcourt, the General Manager, Relations and Sustainable Development, Renaissance Africa Energy, Igo Weli, said, “The gesture by Renaissance and our partners is to enhance the capacity of the hospital to provide critical care to patients in need; improve the training of upcoming healthcare personnel; and provide support to dedicated healthcare professionals in their mission to save lives and improve patient outcomes.”
The Chief Upstream Investment Officer, NNPC, Oluwaseyi Omotowa, noted that the donations were part of a broader social intervention strategy of the Renaissance-operated joint venture.
Omotowa, who was represented by the Lead, Stakeholder Relations, NNPC Upstream Investment Management Services, Mrs. Uzo Ejidoh, further said “the JV has a deliberate corporate social responsibility strategy to serve the people.
“This is an unchanging commitment, hence our steadfast support and investment in social impact projects for the healthcare sector to continue to transform lives”.
Recieving the donations, the Chief Medical Director, RSUTH, Professor Chizindu Alikor, stated that the hospital was committed to the delivery of excellent healthcare along with research and training.
Alikor said, “The teaching hospital is on an upward trajectory. The ICU facilities were over stretched, and we are excited that our request to Renaissance and its partners for assistance was granted.
The CMD expressed the hospital’s confidence in Renaissance’s capacity and people-centric interventions, especially as it concerns Corporate Social Responsibility (CSR) in the health space.

By: Lady Godknows Ogbulu

Oil & Energy

Tight Now, Loose Later: Oil Futures Flash Warning

Published

12 hours ago

May 12, 2025

The Tide

Last week, OPEC+ announced it will once again accelerate the pace of unwinding of production cuts, with output targets for June increasing by 411,000 barrels per day, equivalent to three monthly increments.
This follows a similar move in April, with the organization appearing willing to stay the course amid low oil prices and fears of weakening demand.
We reported that global crude inventories remain low enough, thus giving OPEC+ a window to scale back its voluntary cuts until the market surplus finally arrives.
Saudi Arabia appears intent on “punishing” OPEC+ rascals such as Kazakhstan and Iran for repeatedly violating their quotas.
Commodity analysts at Standard Chartered have reported that the latest OPEC survey of secondary sources reveals that Kazakhstan’s crude oil output clocked in at 1.852 mb/d in March, 384 kb/d above its OPEC+ quota.
Further, the country also failed to keep its promise to cut 38 kb/d in compensation for overproduction in March, bringing its total overproduction to 422 kb/d.
The same scenario is expected to unfold in the coming months. Kazakhstan produced 240 kb/d more y/y in March, a sharp contrast from the other eight OPEC+ members who produced a combined 612 kb/d less.
And now, the oil futures markets are sending a dire warning that oil bulls could find themselves in trouble quite soon due to a combination of the OPEC+ output hike and Trump’s tariffs.
Oil futures curve has formed a rare “smile” shape, a structure Morgan Stanley says was last seen briefly in February 2020 just before the infamous oil price crash.
On Wednesday, Brent futures’ July contract was trading at a premium of 74 cents to the October contract, a market structure known as backwardation, foreshadowing immediate tight supply.
However, prompt prices from November have formed a contango, with forward prices flipping to a discount, indicating oversupply as traders predict Trump’s tariffs will eventually weaken oil demand. Having backwardation and contango together leads to the rare “smile” shaped curve.
According to the latest available data by the International Energy Agency (IEA), global oil inventories stood at 7.647 billion barrels in February, down from 7.709 billion barrels for last year’s corresponding period and close to the bottom of their historical five-year range.
Meanwhile, refiners’ appetite for crude is climbing ahead of the peak driving season in July and August, “Refinery maintenance in the Atlantic basin will start to taper off, increasing oil demand (for refining)… Summer driving should provide some support,” BNP Paribas analyst told Reuters.
Global oil demand is expected to rise by 1.3 million barrels per day in the third quarter of the current year, up from an average of 104.51 million bpd in the second quarter, the IEA has predicted.
The 1 million bpd output increases announced by OPEC+ so far, coupled with another 400 kb/d increase in July, almost matches the predicted demand increase, implying oil markets will not face a surplus till late in the year.
Meanwhile, oil prices jumped in Thursday’s session after the Trump administration announced it has struck a trade deal with the UK. Brent crude for July delivery was up 2.7% to trade at $62.75/bbl at 12.50 pm ET while WTI crude contract for June delivery added 3.0% to change hands at $59.86 per barrel. However, terms of the deal appear to fall well short of the “comprehensive” package Trump earlier touted.
According to Trump, UK Prime Minister, Keir Starmer, will further reduce non-tariff barriers and fast-track U.S. goods into his country.
Meanwhile, another solid week of jobless claims underscored the Federal Reserve’s ongoing unwillingness to cut rates. U.S. jobless claims fell 13,000 to 228,000 for the period ending on May 3.
Continued claims, however, clocked in at just over 1.9 million, near the highest levels since 2021, suggesting workers are still finding it difficult to secure new jobs as the economy stalls.
That said, commodity analysts at Standard Chartered have predicted that path of least resistance for oil prices is lower in the coming months, with oil prices to remain low before beginning a gradual recovery later in the year as U.S. oil output declines.
StanChart, however, says there’s some technical support in the short-term, with fundamentals remaining fairly positive. Recently, StanChart cut its 2025 oil price forecast to $61/bbl from $76 and also lowered its 2026 forecast to USD 78/bbl from $85 citing Trump’s tariffs.