nigeria marginal fields bid round · promote indigenous participation. roadmap of marginal field...
TRANSCRIPT
Engr. Sarki Auwalu, MNSE
Director/CEO, Department of Petroleum Resources
DEPARTMENT OF PETROLEUM RESOURCES (DPR)
Guest Speaker at NAPE Webinar
Nigeria Marginal Fields Bid Round:Implications, Opportunities and Challenges
July 8, 2020
Concluding Thoughts
1
2 Marginal Field
Operatorship Program
DPR and NAPE
Implications &
Opportunities
Status and Outlook3
4
5
Outline
G&G Core to DPR
Regulatory Mandate
Conservation of Oil & Gas
resources
Ensure Sustainable
Development of Nigeria’s
Oil & Gas ResourcesDPR
Association of Petroleum
Geologists and related disciplines
Promote the study and practice
of petroleum geosciences
Ensure benefits for
members and other
stakeholders
NAPE
Our Ideas Find Oil & Gas and More…
DPR
DEPARTMENT OF PETROLEUM RESOURCES
National Aspirations for the Oil & Gas Sector- Drivers for Marginal Field Development
1 2 3UPSTREAM MIDSTREAM DOWNSTREAM
• Oil Reserves
– 40 Billion Barrels
• Grow Gas Reserves – 210 TCF by 2030
• Oil Production Capacity – 3 Million Barrels
• Increased Gas Monetization
• Elimination of Routine Flaring
• Domestic Gas Supply Sufficiency – Power. Commercial. GBIs
• Domestic Refining Capacity
– 50% of Production
• Price Freedom
• Optimum Petroleum Products
Distribution Networks
• Petroleum Products Supply
Sufficiency (Fuels, LPG, CNG)
Definitions
5
Marginal Fields Fundamentals
A Marginal field is any field
that has reserves booked
and reported annually to the
Department of Petroleum
Resources (DPR) and has
remained unproduced for a
period of over 10 years.
➢ President exercises powers under
Paragraph 17 of the First Schedule
of the Petroleum Act 1969 to cause
the farm-out of a Marginal Field
➢ Holder of an OML may farm-out
marginal field subject to terms and
conditions approved by the
President
➢ President reserves the rights to give
(or withhold) consent of a farm-out
of marginal fields
➢ Marginal field means any field that
the President may, from time to
time, identify as such.
➢ Government reserves the right to
withdraw award should an Awardee
fail to comply with applicable terms
G U I D I N G P R O V I S I O N S
ACT
REGULATIONS
GUIDELINES
Legal & Regulatory Framework
❖ Petroleum Act 1969
o Petroleum (Amendment ) Decree No. 23 of 1996
❖ Marginal Field Operations (Fiscal Regime)
Regulations 2005
❖ Guidelines for the Award and Operations of Marginal
Fields in Nigeria (2020), and Explanatory Notes
A ‘Win-Win’ Value Proposition
❖ Government
❖ Nigerians
❖ Nigerian Investors
❖ Foreign Investors
Generate
Employment
Increase
Oil & Gas Reserves
Increase
Production
Encourage Capital
Inflow
A multifarious range of
objectives are met by
Marginal Field Development
Objectives of Marginal Field Programme
Build Technical
Capacity
Promote Use of
Shared Facilities
Promote Indigenous Participation
Roadmap of Marginal Field Awards
1999
Twenty-Four (24) Fields
2003/2004
One (1) Field
2006
Fifty-Seven (57) Fields
2020
One (1) Field
2007
2020
Two (2) Fields
1999
2007
20062003/04
2010
Two (2) Fields
2010
Thirty (30) Marginal fields
- Land (13)
- Swamp (8)
- Offshore (9)
~ 2% contribution
to National Oil &
Gas Reserves
Increase of 75%
and 100% in Oil
& Gas Reserves
Oil Production
Potential (800 – 16,000bopd)
Gas Processing
Capacity (~400 MMScfd)
Domestic Refining
Capacity - 6kbopd(Additional 12kbopd by Q4 2020)
16 Producing
fields
Marginal Fields Performance- A Global View
10
Snapshot of Marginal Field Performance (1)
Oil Reserves1
2% Contribution
Gas Reserves2
1.6% Contribution
Oil Reserves3
75% Growth
Gas Reserves4
100% Increase
11
Snapshot of Marginal Field Performance (2)
Record of Achievements of Marginal Fields
12
Reserves and Production
Growth
Nigerian Content Impact
Domestic Energy Security
Increased Government
Revenue
CSR and Community Engagement
13
Synopsis of the 2020 Marginal Field Bid Round
• Deepen participation of Nigerian Indigenous Companies in the Upstream
segment of the Industry
• Provide Opportunities for Technical and Financial partnerships for Investors
Objective01
• Indigenous Participation
• Grow Reserves and Optimise the potentials of Assets
• Wealth Creation & Revenue Growth
Key principles02
• Attract Credible Investors with Technical and Financial capability
• Early Asset Development and attainment of production within a short timeframe
Resources03
• Electronic-based bidding process
Structure04
DEPARTMENT OF PETROLEUM RESOURCES
2020 Marginal Field Bid Round
-Basis for Sustainability
General Post-Award Conditions
✓ Transfer of Interest Post Award - Awardee can not assign more than 49% interest to another party post-award.
✓ Termination of Rights of Interest Holder - In case of Joint Award, the Minister reserves the right to cancel/withdraw the interest of a party
or parties whose failure in meeting their obligations result in the Awardee(s) being unable to progress work on the field.
✓ Protection of Partnerships - The Minister reserves the right to void an award if the activities of the parties post-award are aimed at
frustrating the basis of the award as evidenced in the technical /commercial services agreement submitted in support of the bid.
✓ Dispute Resolution - All operational and commercial disagreements arising among Awardees or between Awardees and their partner(s)
post-award, shall first be referred to the Nigerian Oil and Gas Alternative Dispute Resolution (ADR) Center
15
Award Process and Evaluation Criteria
❖ Evidence of Company’s
Existence
❖ Evidence of Capability to
Pay Applicable Premium
❖ Nigerian Content Plan
❖ Participation of Host
Community/State
❖ Nature of Company – E&P,
Federal Character
Representation
❖ Evidence of Technical and
Managerial Capability
❖ Eligibility to Participate – e.g.
Records of Indebtedness to
Government
16
01
02
03
04
•Lower Risk of Development: Marginal
Fields are usually discovered fields
which significantly reduce risk of
development.
•Early Time to Production:
Typically, 18-24 months
timeframe possible.
•Low Investment Cost: Lower
cost of investment (US$ 50-100
Million) as compared to major
capital projects.
•Ownership of Asset:
Marginal fields are owned by
operators as sole risk,
independent of the host
government. This provides for
maximum returns to investor.
Implications of Marginal Fields Development (1)
17
06
07
05
•Regulatory Support: DPR enforces
regulatory practices of general application, but
Marginal Field operators will continue to enjoy
significant support to enable their growth in line
with Government aspirations.
•.
•Start Small; Grow Big:•Potential for Scalable Development
•Shared Infrastructure:Common usage of facilities to
ensure optimum utilization for
crude transportation and export.
Implications of Marginal Fields Development (2)
DEPARTMENT OF PETROLEUM RESOURCES
Meeting the Challenges…
18
DEPARTMENT OF PETROLEUM RESOURCES 19
Vertical Integration &
Diversification
• Upstream, Midstream and Downstream
• Power Generation
• Gas Industrial Hubs
Collaboration and Synergy
• Clusters of contiguous fields to aid synergy and collaboration among operators.
Aggressive Work Programme
Implementation
• Appraisal opportunities
• Field Studies
Community Relationship
• Corporate Social Responsibility (CSR)
Compliance • Regulatory
• Operational Excellence
Cost Control and Optimization
• Global Best Practices & Benchmarks
Opportunities
- Winning Strategies and Models
Concluding thoughts…
20
Employment
opportunities and local
content capacity with
positive impact on the
economy
Government will remain
focused on the gains of
marginal fields program
and continuously put
measures to sustain the
initiative
Challenges are being
addressed to ensure
sustainable
development
Great Opportunities
exist Investments &
Foreign Direct
Investment (FDI)
01
0203
04
DEPARTMENT OF PETROLEUM RESOURCES
‘Nigeria is Open for Business’
www.dpr.gov.ng