-By Teddy Nwanunobi
The Federal Government has requested from the 161 companies shortlisted as bid winners of the 57 marginal fields on offer in the country’s second marginal field bid round for the signature bonus.
It added that it expects the signature bonus, which must be paid within 45 days, could be paid in either Naira or US Dollars.
The request was contained in the third letter the Department of Petroleum Resources (DPR) has distributed in the series of correspondences it has been sending to the companies.
The third letter, which was emailed on March 2, 2021, according to a report, specifies the percentage awarded to the recipient, as well as the signature bonus expected of it by the Federal Government.
The total signature bonus per field ranges from $5 million to $20 million, with the signature bonus demanded from each company, depending on the percentage interest in the field offered to the company, as no single field is assigned to a single firm.
For instance, if the entire signature bonus charged to Field A is $5 million, a company assigned 20 per cent equity in that field is asked to pay a signature bonus of $1 million.
This latest correspondence to awardees still does not specify who one’s partners are, and does not tell who operates the field.
But the partners on each field, however, are expected to jointly create a Special Purpose Vehicle (SPV) to operate the asset.
The lack of knowledge of who one’s partners are raises the risk involved in the funding of the signature bonus.
So does the instruction to awardees attached to every field to create an SPV to act as operator.
Names of successful bid winners remain largely unknown, as the authorities are yet to make the list public.
But the report suggests that winners of this round include, at least, three marginal field operating companies; at least, three companies, run by members of the Petroleum Technology Association of Nigeria (PETAN) – the umbrella association of oilfield engineering contractors.
Other companies that have reportedly received letters include those promoted by the retired technical staff of some of the oil majors operating in Nigeria.
Although there have been talks about underhand dealings in Abuja, with names of companies that did not take part in the bidding process awarded oilfields.
The first of the three letters emailed to “winners” indicated that the addressee was qualified for a certain field.
The second letter then merely asked the awardee to specify which currency they want to pay the signature bonus in.
This third letter, then, which specified the percentage that the awardee has on the field, and requested for payment of the signature bonus by a certain date, is the first firm commitment the authorities are making to an awardee.
But questions around who other partners are and who to operate the field indicate that there will either be a fourth letter, or the DPR will publish a list on which the fields, the awardees to each field, the signature bonus and the operator will be.
Marginal fields are known oil or gas discoveries on an International Oil Company (IOC)-owned bloc, where there has been no activity in at least the last 10 years.
With the agreement of the IOC, the DPR carves out a piece of land surrounding the discovery and this becomes a marginal field.
The bid round, which began on June 1, 2020, is coming about 18 years after the last similar exercise in 2003, and is open to indigenous oil and gas companies, and investors that are interested in participating in the exploration and production business in Nigeria.
The 2003/2004 marginal field bid round was a high-water mark in the annals of licencing rounds in Nigeria in which 120 companies were shortlisted from a bidders’ list of less than 200 companies that applied for 24 fields, with their names all published.