Despite fluctuations in oil prices, significant reduction in global oil consumption, and the non-passage of the Petroleum Industry Bill, the federal government of Nigeria, through the Department of Petroleum Resources, has commenced the process for a marginal field bid round, with 57 fields being put up for award. The bid round, if successful will be the second bid round for marginal fields in Nigeria, since the 2002/03 marginal field bid rounds of 17 years ago.
Although the DPR had published a guidelines in 2013 for a proposed marginal fields bid round, the said bid round was never held. In addition to this, the non-passage of the Petroleum Industry Bill creates a lot of uncertainty on what to expect with this marginal fields bid round.
Marginal fields are small oil fields located within an oil acreage covered by a petroleum license, but which the holder of the petroleum licence does not consider commercially viable for development. Nigerian Petroleum legislation provides that where such field has been left undeveloped for at least 10 years, it can be put up for auction as a marginal field.
The focus of this article is to examine the process for the award of the proposed marginal fields, and highlight the contractual framework awardees are expected to consider where the bid round is successful.