Marginal Field: Canadian Firm in Talks With Operators
Energy
By Mike Oduniyi
As indigenous oil firms struggle to obtain funds to develop their marginal fields, Canadian firm, Mart Resources, has begun talks with several operators with a view to providing technical and financial services.
Mart Resources is run by the former promoters of Abacan Resources, which helped pool funds for some of the first set of indigenous oil exploration companies, including Amni International Petroleum and Alfred James.
THISDAY gathered that negotiations with Mart Resources might, however, yield little or no results given the demand of the Canadian firm for an agreement that could see it take control of the management of the small oil fields.
Although many of the operators are being lured by the perceived ability of Mart Resources to mobilise the needed money to develop the fields, the resolve to be in control of the fields remains a stumbling block.
For instance, Mart Resources said at the weekend that it has entered into a Letter of Intent with Midwestern Oil and Gas that grants Mart the right to participate in the development of the Umusadage Field.
The Umusadage Field, one of 24 marginal fields granted to indigenous companies under the Federal Government's Marginal Field Programme, is an onshore oil and gas field originally owned by Elf Petroleum Nigeria Limited and located in Oil Mining Lease 56. Midwestern Oil and Gas shares the field with Suntrust Oil Company Ltd.
Officials said three wells were drilled and cased in the field between 1974 and 1980. The N2 well, which was the only well tested, flowed 2,654 barrels of oil per day.
Under the terms of the letters of intent with Midwestern, Mart is to be responsible for paying 100 percent of the costs required for joint operations on the Umusadage Field. In return, Mart shall be entitled to receive an allocation of crude oil and natural gas produced from the field under a production sharing arrangement with Midwestern Oil.
Mart's right to participate in the Umusadage Field is subject to the execution of a formal agreement.
"The terms associated with the assistance coming from Mart Resources is the key problem," said one official. It is structured in a way that one could practically be handing over the field to the company, the official said.
The chief executive of one of the firms also in talks with Mart Resources told THISDAY that many of the marginal field operators being professionals themselves, would prefer getting investors provide funds rather than come in as equity partners.
THISDAY reported recently that marginal field operators now walk tight rope following potential foreign investors slammed stiff conditions on local companies wishing to raise funds to develop marginal fields.
The high risk nature of the Nigerian environment further raised the stakes. While the Nigerian firms are seeking to raise about $20 million to develop each field, prospective investors contacted, mostly from the United States, are demanding a minimum of 25 per cent returns on investment, before agreeing to put down their money.
The government had embarked on the marginal field project with broad objectives, which include:
_Expanding the scope of participation in Nigeria's oil industry and diversify the sources of investment and the inflow of funds,
_Increase the oil and gas reserves base through aggressive exploration,
_Promote indigenous participation in the oil industry thereby fostering technological transfer,
_Provide opportunity to gainfully engage the pool of high level technically competent Nigerians in the oil an gas business that now exists,
_Expand production output capacity, and to
_Enhance employment opportunities. Nigeria, the sixth largest OPEC crude oil exporter, currently has a production capacity of a little above two million barrels a day. However, more than 90 percent of this output is from multinational oil firms.
|
