Nigeria’s plan to increase its crude oil revenue to N4.314 trillion from 300 million barrels of crude oil now looks “unlikely” due to the under-utilization of licensed marginal oil fields.
Marginal fields refer to discoveries which have not been exploited for long, due to one or more of the factors like very small sizes of reserves to the extent of not being economically viable or lack of infrastructure in the vicinity and profitable consumers.
According to the Nigerian National Petroleum Corporation (NNPC), Nigeria has 200 oil fields branded as marginal due to distance to existing facilities and low-ranking in investment portfolio.
Out of the 200 oil fields only 24 oil fields with an estimated reserve of about 300 million barrels of crude were granted licenses by the Department of Petroleum Resources (DPR).
Experts have said that 18 of the marginal fields with an average capacity of 5,000 bpd each could produce 90,000 (barrels per day) bpd of crude oil.
In 2004, the Federal Government awarded 30 marginal fields which are said to produces around 2.6% of daily oil production and 2.5 % of the estimated 4,000 million standard cubic feet per day (MMSCFD) gas productions in the country. Out of these 30 marginal oil fields only 12 are said to be active. The remaining 18 have been classified as non-producing and ”oil farmers” at this point have to give up the assets after disregarding the opportunity to renew their licenses.
According to the President of Nigeria Association of Petroleum Explorationists (NAPE), Abiodun Adesanya and the Managing Director and Chief Executive Officer of Energia Limited, Felix Valentine Amieyeofori these are the reasons why the oil fields are idle:
- Lack of funding especially from government.
- International Oil Companies (IOCs) who made these discoveries kept the oil fields idle because the oil fields did not meet up with the threshold of their corporate size.
- There are lots of co-ventures and partnership issues.
- There are technology and experience gaps, and rather than use local or foreign experts, some of the marginal fields’ operators still resort to the use of the trial and error method of restructuring.
The Chairman of Petroleum Technology Association of Nigeria, Bank Anthony Okoroafor has said that Nigeria’s target of increasing our crude oil reserves to 40 billion barrels and production to 4 million barrels per day can only be realized when there is investment in explorations and developments.
“New blocks should be given out for people to explore. We should conduct blocks and marginal bid rounds so people will explore and share with government; incentivize people to come and explore new areas; new bid rounds under laws that are friendly to investors,” he added.