With 57 marginal fields up for grasps in 2020, participation in the Nigeria marginal field investment is a great opportunity to profit from the Nigeria oil and gas. As the global oil market goes into recovery, returns on investment will continue to be on the upside as operators are getting a better understanding of the risk profiles.

The Department of Petroleum Resources (DPR) in Nigeria is coordinating the 2020 marginal fields bid round. This is on behalf of the Federal Government of Nigeria and the Ministry of Petroleum Resources. The expectation is that DPR will provide process transparency, industry expertise and independent evaluation of bids.

Conceptual Definition Of Marginal Field

The Department of Petroleum Resources also defines the marginal field in its guidelines for the 2020 marginal field bid. 

A marginal field is any field that has reserves booked and reported annually to the Department of Petroleum Resources (DPR). and has remained unproduced for a period of over 10 years. 

1. The license holder does not consider the field for development because of assured marginal economics under prevailing conditions. 
2. An exploratory well drilled on the structure and reported as oil and/or gas discovery for more than 10 years. 
3. The field that the present leaseholders consider for farm-out due to portfolio rationalisation. 
4. Such field which the President may, from time to time, identify as a marginal field.

Investment Implications Of Marginal Field Definition

The definition of the marginal field has some implications for investment which a marginal field investor should consider. These implications are key factors in the investment decision model: 

1.  Assured marginal economics: The investor needs to re-evaluate the historical risks and costs of the proposed marginal field. Because the economics of the OML is considered marginal. The key question is - what has changed over the years and what will be the costs of mitigations?
2. Exploratory well drilled for more than 10 years: The existing infrastructure may likely have decayed and requires an urgent upgrade. There may be a heightened expectation on the part of the host community for immediate corporate social responsibility initiatives. Since the field was not in operation for over 10 years.
3. Portfolio rationalisation: The investor should know the underlying drivers for portfolio rationalisation. The drivers should be risked in the investment decision model.
4. President discretion: The marginal field is expected to be efficiently operated to deliver competitive returns to the investor and government. And also contribute towards the national oil and gas aspiration. Having proper risk management will ensure that the marginal field does not hibernate beyond 10 years. To avoid being reclassified as a marginal field and re-awarded. 

Development Implications Of Marginal Field

Operators and investors spend a significant portion of their capital expenditure on-field development. The assumption as stated by the Department of Petroleum Resources is that there will be seven key implications for the field developers. 

These implications include ownership of the asset, low investment cost, lower risk of development, early time to production, shared infrastructure, regulatory support and scalability.

1. Ownership Of Asset: The marginal are owned by operators as sole risk, independent of the host government. This provides for maximum returns to the investor.
2. Low Investment Cost: It is projected that there will be a lower cost of investment in the range of US$50mln to US$100mln when compared to capital investments by the major oil companies.
3. Lower Risk Of Development: Marginal fields are usually discovered fields that significantly reduce the risk of development.
4. Early Time To Production: Typically the possible timeframe from final investment decision to production is within the range of 18 months to 24 months
5. Shared Infrastructure: Operators are encouraged to collaborate on common usage of facilities to ensure optimum utilisations for crude transportation and export.
6. Regulatory Support: Government will enforce regulatory practices of general application. However marginal field producers will enjoy significant support to enable growth in line with government aspirations.
7. Start Small, Grow Big: Investment in the Nigerian marginal fields provides a potential for scalable development.

Operators And Investors Should Seek Advisory

The oil and gas industry space in Nigeria is opening up progressively for more participation of local investors as marginal field operators. Often these local investors collaborate with foreign investors to operate marginal fields. Investors should understand the implications of investment and field development of the marginal field 

Investing in the oil and gas industry is usually complex, challenging and rewarding. Though there are a lot of blind spots. It is always advisable that the services of ex-managers with decades of actual working experience in the oil and gas industry should be sought. This is to avoid mistakes made by earlier marginal field investors. 

Refer to the following Nigerian regulations: (1) petroleum (amendment) decree 23 of 1996, (2) marginal field operations (fiscal regime) regulations of 2005, and (3) guidelines for the award and operation of marginal fields in Nigeria (explanatory note).

Get expert help as you undertake investment in marginal field

Gabriel Domale Consulting, under the leadership of Dr Leesi Gborogbosi, has the expertise to help investors have a better understanding of the oil and gas industry, especially the marginal field. We will provide support in cost estimation, valuation, economics, cost reduction, finance operations, planning and budget.

Specifically, our focus is to help the growth of marginal oil and gas companies by functioning as:

1. Technical Partner - Operatorship.
2. Technical Partner - Corporate and Business Strategy.
3. Technical Partner - Finance and Treasury Operations.
4. Technical Partner - Transformation.
5. Technical Partner - Governance Structure, Risk and Compliance.
6. Technical Partner - Investment plan and Budget planning.
7. Technical Partner - Commercial and Technical Due Diligence.
8. Technical Partner - Capital Efficiency and Operational Excellence.
9. Technical Partner - Cost Reduction Program.
10. Chief Strategist   - To the CEO & Board of Directors.

Request For Our Services

Request For Proposal: https://www.www.gabrieldomale.com/submit-rfp.php

Call us on +2347034604152

Visit us: https://www.www.gabrieldomale.com

Dr Leesi Gborogbosi worked with Shell Nigeria, a Royal Dutch Shell Company, a leader in the oil and gas industry, for 26 years. He was Project Finance Manager of Upstream Oil & Gas Projects (Headline size: $8 bln) - Southern Swamp Associated Gas System, Forcados Yokri Integrated Project, Otumara, Adibawa, Agbada and Assa North/Ohaji South Projects.  

Dr Leesi provided advisory services namely, strategic planning, budget management, funding strategy, risk management, project economics review, and investment plan. These services covered the full life cycle of 7 major upstream oil/gas projects, power facilities and export pipelines. 

See his profile: https://www.www.gabrieldomale.com/blog/consulting-my-drive-is-to-help-companies-in-africa-to-grow 

Our leading consultants are ex-managers from the oil and gas industry with a minimum of two decades of hands-on leadership experience and insights.

Our Consulting Services Include: 

1. Finance.
2. Value-For-Money Audit.
3. Taxation & Audit.
4. Strategy.
5. Contracting Strategy.
6. Budget & Planning.
7. Performance Management.
8. Merger & Acquisition.
9. Due Diligence & Deal Advisory.
10. Governance, Risk & Compliance.
11. Leadership Training.
12. Human Capital.
13. CFO & Non-Executive Director - Search.
14. Transformation.
15. Cost Reduction & Optimization.
16. Facilities Management.
17. Digital/Data Analytics.
18. Public Sector.
19. Institutional Reforms.       

Core Sectors We Focus On In Delivering Consulting Services 

1. Oil & Gas.
2. Capital Projects / Construction.
3. FMCGs.
4. Hospitality.
5. Technology.
6. Financial Services.
7. Public Sector.
8. Agriculture.
9. Non-Profit Organisations. 

Our Value Propositions

Gabriel Domale Consulting collaborates with finance leaders to make crucial decisions and optimize performance. By focusing on financial excellence in finance systems, accounting operations, budgeting, finance transformation, cost reduction, governance, risk, and compliance.

We provide support to business and finance leaders to help them to identify growth opportunities and create value. Using excellence in strategy implementation, capital efficiency, building strategy, planning frameworks and the crafting of innovative funding solutions. Also, we deliver projects within costs.

Bio Of Our CEO - Dr Leesi Gborogbosi

Dr Leesi Gborogbosi, is the CEO of Gabriel Domale Consulting (Management Consulting Firm), Nigeria, helping companies in Africa to grow by providing advisory in finance, strategy, corporate governance, transformation, cost management, leadership and institutional reform.

Dr Leesi Gborogbosi has doctoral degrees in strategy (and also in business studies) and MSc (Research Methodology in Management) from IE Business School, Madrid and an MBA (Finance and Banking) from the University of Port Harcourt, Nigeria; and BSc (Accountancy) from the University of Nigeria, Nsukka. He had his secondary education at Federal Government College, Jos, Nigeria.  His doctoral dissertation focuses on strategy implementation, collaboration, the role of middle managers, and the dynamics of social movements (host communities).

He leverages his professional experience as a Certified Management Consultant (CMC); Fellow, Institute of Chartered Accountants of Nigeria; and The Institute of Management Consultants. Also, he is a Member of the Chartered Institute of Purchasing & Supply, London; Nigerian Institute of Management (Chartered); and Strategic Management Society, Chicago, United States.

He was nominated by the Strategic Management Society, Chicago for "Best Conference Paper Prize Awards" in 2017 and 2015. He was appointed the Chair for the Session on “Leading change implementation processes” at the Strategic Management Society conference in Denver, United States in 2015.

Dr Leesi Gborogbosi has about three decades of leadership experience in the oil and gas industry (Shell Nigeria). He is an expert in finance, strategy, corporate governance, transformation, cost management, leadership and institutional reform.