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Stakeholders list challenges to marginal field growth

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PHOTO:advisoranalyst

PHOTO:advisoranalyst

Stakeholders in the Nigeria’s oil and gas sector have identified challenges facing the development of the marginal fields in the country.

The operators who gathered at the 2016 Africa Small and Marginal Oil Fields Development Conference, with the theme, “Find It, Commercialise It” in London on Monday, listed funding issues, shortage of foreign exchange (Forex) due to low oil prices, insecurity and deferred production due to attacks by militants, fiscal issues that pertains to royalty and Petroleum Profit Tax (PPT), as some of the challenges confronting marginal field development in the country.

Some of the stakeholders such as Deputy Director/Head, Upstream Department of Petroleum Resources, Emmanuel Bekee, and Managing Director, LADOL, Dr. Amy Jadesimi, listed other challenges to include low oil prices and market volatility, declining Foreign Direct Investment due to country risks, problems of technology, equipment availability, lack of standardised processes, failure of local banks to grow domestic investment market.

They also enumerated issues of multiple regulators from the side of government, and incessant risk emanating from host communities.

A communiqué issued at the end of the forum and made available to The Guardian yesterday, by the organisers, Energy Corporate Africa, stressed the need for government to align its policies to avoid multiple regulatory conflicts by its agencies, which frustrates the operations of marginal field companies.

It noted that it is expedient for government to recognise that for the objectives of promoting marginal field development to be achieved fully, it must be proactive to global issues, support marginal field operators and should not use same yard stick to bench mark or regulate marginal field operators, and international oil companies.

According to the communiqué, indigenous companies should also ensure corporate governance, by avoiding family laden organisation and anything that will dent their reputation, and create a high performance corporate culture to be a preferred place to work by their employees, they should build strong team with technical and organisational expertise, uphold social license and robust community relations, have proper internal control system, show competency in Health, Safety and Environment, seek for quality alliance/partnership and invest in human capital to ensure capacity building through quality training.

It also established that for indigenous operators to receive funding they have to put the right proposals to banks. “This will entail a clear strategy which shows a well defined route to production; presenting a right team that has a track record of value creation and also indicating that they have done it before. The indigenous company seeking for fund must also show consistent progress towards production and should not over promise or under-deliver. It is also important that such companies should be able to demonstrate asset value through access to good data, opinion from credible third party and present a well identified upside by way of intents for future acquisition,” it added.

The communiqué disclosed that participants agreed that gas from marginal fields if aggregated in clusters would be a great asset for socio-economic development and gas to power projects will not only drive economic buoyancy but could also de-risk community unrest through the provision of electricity.

“One of the critical discussion points was the germane need for government to overhaul its gas policy. Participants were of the opinion that various government regulatory bodies on gas and marginal fields should align in order to avoid confusion and achievement of intended goals.


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Amy JadesimiforexLADOLPPT
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