While the Department of Petroleum Resources has promised to make marginal fields attractive to investments, operators who know where the shoe problems lie have identified multiple reasons for the slow impact of the country’s 30 marginal fields.
Marginal fields are oil fields or wells that are nearing their end of commercial life. The production rates of these fields are often low, but not lower than those of stripper wells.
The Managing Director, Niger Delta Exploration and Production, Mr. Layi Fatona, said multiple taxation was a major challenge confronting marginal field operators in the country.
Speaking during the 2013 Annual Oloibiri Lecture Series and Energy Forum organised by the Society of Petroleum Engineers recently in Lagos, Fatona said that indigenous marginal field companies were facing challenges of start-up assets and multiple taxation by local, state and federal governments.
The inability to access funds and the right calibre of people, he said, had also made the marginal field’s asset unattractive to investors.
The only way to enhance indigenous participation in the Nigerian petroleum industry, according to him, is to make the assets more attractive and bankable.
“There should be timely agreement with lease holders and government agencies in all marginal field operations. Government should assist indigenous marginal field operators through import duty waivers and tax breaks and also improved local bank involvement by reducing rates,’’ he said.
Fatona further identified poor technical competence, fluctuating assistance from foreign equity partners and low funding capacity of indigenous players as factors hindering the impact of marginal fields operators on the Nigerian economy.
“Federal Government’s policies to promote indigenous participation in the petroleum industry are quite laudable. The success of the indigenous players’ incursion into field development and production can be said to be very ‘marginal,’’ he said.
Fatona said that the investment on infrastructure was an indication of what could happen if there was a more structured guidance for the unleashing of entrepreneurial energies of Nigerians.
According to him, indigenous companies are facing legislative, financial, logistical and technical challenges on the way to their first oil or gas.
“The challenges must be adequately analysed and remedial actions fully enshrined in necessary legislation,’’ he said
