June 13, (THEWILL)- Stakeholders and industry experts have described the recently concluded marginal field bid-rounds conducted by the Department of Petroleum Resources (DPR) as a charade. They also maintain that the circumstances that encumbered the successful execution of the last exercise almost two decades ago, have not changed.
Eighteen years after 24 marginal oil and gas fields were offered for bids by Nigeria’s oil and gas regulator, DPR, the country recently concluded a marginal field bid-rounds, an exercise that is being faulted by stakeholders.
According to experts and industry watchers, who commented on the matter, the processes of the recent bid-rounds, like its predecessor in 2003, culminated in the presentation of letters to the bid winners, but differed in the turnout of bidders. They argue that the recent bid-rounds may end the way of the former, which witnessed poor follow-up by the winners.
They maintain that, although there emerged 21 winners in the 2003 bid-rounds, which witnessed 24 fields put up for bids, only a handful of bidders was barely able to pay fully for the fields they won. They further argue that some of the winners, who bid on the basis of the promise of free crude oil lifting as an incentive, backed off when the free crude oil barrels were not forthcoming.
The experts draw attention to the fact that, of all the fields offered at the time, only 16 were operational, contributing less than two percent to the national oil reserve.
Speaking on the possibility of the recent bid rounds turning to a charade, a Port Harcourt based oil and gas consultant, Engr. Simeon Dakoro, posits that the current political atmosphere in the country, among several other reasons, may lead to the exercise turning into a charade
Referring to the Niger Delta region where most of these fields are found, Dakoro warns that unless the government does something to assuage the temper of the teeming youths of the region, most of who are currently singing a war song, there will be little achievement from the recent exercise.
Dakoro also notes that the present government, given its character, may not be ready to consider appeasing the youths. This is because, its stand on the youths’ demand is that the youth cannot have their cake and eat it given their attitude to the previous administrations.
Mr Peter Tema, an oil and gas service practitioner, observed that the DPR chose the wrong time to carry out the bid-rounds, pointing out that the country is at a crossroads politically, economically and securitywise. He said that situations like this were responsible for serious operators not participating in the recent bidding exercise.
Another area that led to the recent bid-rounds being considered a charade is the status of the bid winners. This is what industry watchers refer to as the harvest of non-starters and un-known names in the industry that emerged winners of the bids. These groups, they say, fall into the category of traders, who would only use the acquired fields for other businesses because they lack the wherewithal to operate the fields which are either on land, in the swamps or offshore.
They also stated that the list of winners as published by the DPR revealed that the country has not put an end to awarding fields to cronies, friends and family members; an anomaly they observe has become the Achilles heels of the industry over the years.
This barrage of criticism notwithstanding, the DPR has announced that 161 entities were successful at the bidding rounds and they will advance to the final stage. It informed that the successful 161 bidders were shortlisted from about 591 companies that applied for pre-qualification.
Some of the winners in the exercise include Matrix Energy, Andova, Support Midstream, AA Rano, Genesis Technical, Twin Summit, Bono Energy, Deep Offshore Integrated, Oodua Oil, MRS and Petrogras.
Others are Tempo Oil, Pioneer Global, Accord Oil, Pathway Oil, Aida, YY Connect, NIPCo, Virgin Oil, Pierport, North Oil, Shepherd, Hill, Akara and Metropole, among a host of others.
Unlike the 2003 bid-rounds, where Chinese national oil company- CNCP, India’s ONGC Mittal and Verdash took part, the recent bid-rounds witnessed 100 percent indigenous companies as winners.
According to the DPR Director, Sarki Auwalu, the department realised $500 million in signature bonuses. Auwalu, during the exercise, disclosed that the bid will enhance economic growth, increase the gross domestic product (GDP) and create employment, while mistakes of the past will be avoided this time.
It could be recalled that after the 2003 bid rounds which was applauded by the industry experts and watchers, about 11 licences were revoked leading to loss of revenue as taxes and royalties were not paid on the fields while about 40 million barrels of crude oil and its equivalent of gas, could not be harnessed.