TheCable

The Department of Petroleum Resources (DPR) says the federal government is expected to generate $500 million from signature bonuses for 57 marginal oilfields in Nigeria.

Sarki Auwalu, director of DPR, said this on Friday, in an interview with Arise News in Lagos.

DPR had commenced the 2020 marginal field bid round on June 1, 2020 with 57 fields available for indigenous companies and investors interested in participating in the exploration and production business in Nigeria.

In December 2020, the agency said 161 out of 600 companies were successful and shortlisted to advance to the final stage of the bid round process.

Auwalu explained that DPR decided to use average signature on the oil fields in order to calculate what is being expected.

“What we did internally is to look at the competent person report and objectively estimate the average signature bonus on a field,” he said.

“Some fields are high while some fields are low. We estimate to have not less than $500 million, which is on the conservative side, so we use that to guide us on the average signature bonuses we expect.”

Auwalu said this amount is different from the funds already generated by the agency through applications and data leasing for the marginal oilfields applicants.

He also said DPR had gotten approval for the signature bonuses to be paid in either dollar or naira to simplify the process for Nigerian companies and reduce strain on the country’s external reserve.

On the timeline for the exercise, Auwalu said DPR will not waste time in arranging how operators would enter the fields as soon as all arrangements have been completed.

“Immediately after the payment of the signature bonuses and compliance with the farm out agreement and farm out demarcation area, we will issue the award and bring the companies together for them to arrange how to enter the fields.

“Going forward, we will give about 90 days during which the oil mining license (OML) holders will have discussions because no two fields are the same so that we allow these assets to be developed.

”We believe it will increase the reserves of this country as well as provide a lot of stimulants to the economy.”

Meanwhile, the bid round processes for the marginal oilfields is expected to conclude before the end of the first quarter of this year (Q1 2021).