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Stakeholders task Federal Government on transparency in lease renewal, digitalisation

Participants at the recently-concluded Nigeria Annual International Conference and Exhibition (NAICE) of the Society of Petroleum Engineers (SPE), Nigeria Council...

A crude oil production field PHOTO: AFP

Participants at the recently-concluded Nigeria Annual International Conference and Exhibition (NAICE) of the Society of Petroleum Engineers (SPE), Nigeria Council, have urged the Federal Government to be transparent and consistent in the application of rules with regards to lease renewal to avoid escalation of the nation’s political risk factor amongst existing and prospective investors.

Besides, they identified the need to conduct another bid round for marginal fields; in order to sustain the existence of successful marginal field operations, adding that most of the marginal field operators run single assets that are now depleted.

In a communiqué issued at the end of the conference, participants added that government, operators and service providers should be willing adopters of digitalisation by considering new business models, cultivating a clear corporate digital strategy promoting a culture of innovation and change, and engaging and collaborating with others in the industry.

“Industry organisations need to pursue data protection and focus on developing advanced skills and tools in the cyber security domain.

“Human capital development is critical to Nigeria’s participation in the imminent trend on digitalization. Relevant educational authorities should ensure a fit-for-purpose curriculum containing skills for the future; STEM, software engineering (mobile application), data science and coding etc. Reskilling or retraining of existing workforce is also critical.

“To support an advanced digital energy industry in Nigeria, establishing governance on certification of data quality, incentivising investments in digital technologies and update of legislation and policies to promote collaboration in the industry are critical enablers”, the communiqué, signed by SPE Nigeria Council Chairman, Debo Fagbami, read in part.

On lease acquisition in Nigeria, participants noted that such acquisition has evolved from discretionary to formal competitive processes, as they now attract significant value by way of bonuses, work commitments and contracts. Sizes of blocks are getting standardised, and bid rounds are better structured. Licence periods and terms can be better managed for value.

“On Lease Renewal, too much bureaucracy negatively impacted value delivery due to uncertainties and risks posed to investors. Prospect ought to be tied to more strategic deliverables.

“We observed that the six licensing rounds carried out over a period of twenty-nine years yielded over $3billion despite the refund of signature bonus made to some companies while several millions are being earned from renewal of blocks, especially in the conventional terrain.

“The licensing rounds brought the Nigerian basins into international focus and attracted a number of investors. New Block Renewal Policy ensures that operators focus on meeting their obligations than risk losing their blocks on account of poor performance.

“Good governance guarantees sustainability; by tightening the rules, ensuring fair play, simplifying and automating processes and minimising human intervention”, the communiqué observed.