BY CHIKA IZUORA, Lagos
Operators of marginal fields have lamented that the revocation of eleven marginal oil field licences by the Department of Petroleum Resources, DPR may have imperiled investments valued in excess of $470 million. The operators, in a letter to President Muhammadu Buhari, also said the action has exposed them to litigation both at home and abroad. The affected oil fields and their operators include: Atala operated by Bayelsa Oil/CEPL; Dawes Island operated by Eurafric; Ofa operated by Independent Energy; Ke operated by Del-Sigma/Xenoil; Ororo operated by Guarantee/ Owena; and Ekeh operated by Movido.
The other affected fields and their operators are Akjepo operated by Sogenal;, Tsekelewu operated by Sahara/Africa Oil; Tom Shot Bank operated by Associated/Dansaki; Oriri operated by Goland and Ogedeh operated by Bicta. The operators pointed out that the issuance of the instant revocation letters jeopardises the investment of several state governments, Nigerian entrepreneurs and their foreign technical partners, and immediately creates additional Non-Performing Loans (NPLs) for the local banks.
The operators said in a statement that, ‘‘Nigerian banks are already grappling with huge exposure to the energy sector with attendant impact on the country’s fragile monetary system.
Not only are the actions of the DPR at complete variance with the Marginal Field bid guidelines and the duly executed Farm-out Agreements, we are extremely concerned that the DPR has chosen to pursue such a course of action in the midst of a global economic crisis with its resultant impact on the Nigerian economy at large, and in particular the primary economic contributor thereto, being the oil and gas sector.
“The revocation of the licenses will certainly lead to litigation against the Marginal Field Operators by foreign partners and banks who have financed the development of the Marginal Fields, in addition to sending the wrong signal to both Foreign and local investors.”
The operators explained that they were neither contacted by the DPR nor afforded an opportunity to make any representation before letters revoking their licenses were issued on the 6th of April 2020.
“We have conservatively invested over US$ 400 million in developing the affected fields, with a number of them in production, whilst others are in various advanced stages of development including testing of oil wells, drilling of new wells, construction of production facilities, etc,’’ the statement read in part.
The operators noted that the federal government has championed the development of local content in the upstream oil and gas Industry, adding that the marginal field programme was envisioned to promote the development of indigenous exploration and production capacity.
The operators appealed to President Buhari to direct the DPR to withdraw all letters of revocation with immediately and direct the Department to grant all pending approvals to enable marginal field to continue with the execution of their field development plans.