Home Business & Economy Govt to revoke licences of Idle oil blocks

Govt to revoke licences of Idle oil blocks

The Federal Government has threatened to withdraw the licences of non-performing marginal blocks by March 2015.
The Director, Department of Petroleum Resources (DPR), George Osahan, said at the one-day marginal field sensitization for stakeholders, in Lagos that the department would target the licences of the defaulting operators at the expiration of the deadline.
Osahan said the Federal Government licensed about 28 marginal oil fields since 2003 but only about nine of them have been operational, contributing about 24 per cent to the nation’s oil production.
He said the government was however concerned about the inability of the operators to meet the objectives of bringing the field to production.
“Non-performing marginal fields will be withdrawn by March 2015, unless reasonable commitment is ascertained by government.”A criteria would be used as guide in determining assets to be revoked and those to be given some time before revocation” he said.
Osahan, who also observed that financial constraints was a major setback to marginal field operators, said the companies should go back to the drawing board and repackaged themselves to be credit worthy.
According to him, other factors that have militated against smooth development of the fields includes: “insecurity and community issues; technical capabilities; ownership and partnership tussle; and technology development, among others.
The Director, First Exploration and Production, Emmanuel Enu, was also worried that marginal fields in Nigeria have been characterised by slow take-off syndrome, due to insufficient funds.
Stressing  that a marginal field would require about $30 million to $70 million to get to production stage, he urged the operators to draw a standard and feasible business plan that would spur the financiers’ support.
The Managing Director, Fidelity Bank Plc, Nnamdi Okonkwo, said poor business models and approaches were responsible for failure of many operators from raising funds.
Okonkwo, who was represented by Divisional Head, Oil and Gas, Abolore Sholebo, confirmed that Nigerian banks have capacity to fund the petroleum sector operators, but they are only ready to support companies that have some technical experience; terrain experience; access to equity and organisational acumen.

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