Now that marginal field awardees have paid their signature bonuses and taken control of the assets, what next?

The next stage is the formation of the Special Purpose Vehicles (SPVs). However, SPV is a new concept for the marginal field in Nigeria.

Many of the marginal field awardees are coming with new companies into this new form of SPV.

Therefore these marginal field companies will suffer from the liability of newness.

Freemen argued that “new organisations of a new form are more likely to fail than new organizations with an established form”.

If the risk of SPVs is not fully mitigated, the awardees will spend more of their time in courts rather than in the fields.

The trick lies in setting up SPVs using an established governance form.

Marginal field awardees should seek the advice of ex-managers of oil firms with governance expertise.

I will leverage my 26 years of governance experience in the oil and gas industry to help awardees form and manage SPVs. Worked previously on JOA and Unitization Unit Operating Agreement (UUOA).

Marginal Field - Controlling Interest In An SPV

A marginal field awardee has a controlling interest in an SPV when it either has a majority of the voting rights or the right to exercise a controlling influence over how the SPV is organised and managed.

This marginal field awardee will be in a position to evaluate the strategy, plans and performance of the SPV while ensuring alignment with its own company’s strategy, plans and performance.

The level of influence that can be exercised over an SPV will depend on the structure of the SPV and the rights contained in the SPV documentation.

The extent of this influence can be moderated by local and international laws and regulations such as company law, competition law and conflict of interests.

It is essential that all participants in an SPV have a clear view of the strategy, performance, risks and opportunities of the SPV in order to exercise effective governance and to be able to implement the intervention mechanisms.

I will leverage my governance expertise in the oil and gas industry to help awardees form and manage SPVs.

Marginal field – Risk Management In An SPV

Effective management of risks and opportunities is critical to achieving desired SPV objectives.

Risk management has implications for both the governance of the SPV and management of the SPV operations.

Marginal field awardees should take a risk-based approach to the governance of the SPV throughout the SPV lifecycle.

Changing business conditions, changes in the nature of the activities and decisions made in the course of the life of the SPV will continuously alter the risk profile of the SPV.

Therefore it is important regularly to confirm the adequacy of the governance of the SPV.

Partners in the SPV should right from the beginning define the approach to risk management and ensure there is a risk management manual that provides implementation instructions.

I leverage my risk management expertise in the oil and gas industry to help awardees form and manage SPVs. Worked previously on JOA and Unitization Unit Operating Agreement (UUOA).

Authors

Dr Leesi Gborogbosi 

CEO, Gabriel Domale Consulting – Dr Leesi Gborogbosi

Dr Leesi Gborogbosi is the CEO of Gabriel Domale Consulting, a management consulting firm based in Nigeria, that helps companies in Africa to grow, provides insights to leaders and transforms institutions.

He 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 development and due diligence.

Dr Leesi Gborogbosi was Project Finance Manager of Upstream Oil & Gas Projects (7 projects - Headline size: $8 bln) - Southern Swamp Associated Gas System, Forcados Yokri Integrated Project, Otumara, Adibawa, Agbada and Assa North/Ohaji South Projects.

He provided advisory services namely, strategic planning, budget management, funding strategy, risk management, governance, due diligence and investment plan covering the full life cycle of the seven major upstream oil/gas projects, power facilities and export pipelines.

He collaboratively works with business leaders and their organizations to identify growth opportunities and create value through operational excellence in strategy implementation and capital efficiency by delivering projects within costs, building strategy and planning frameworks and crafting innovative funding solutions.

Dr Leesi Gborogbosi provides support to finance leaders to make crucial decisions and optimize performance through financial excellence in finance systems and accounting operations, budgeting, finance transformation, cost reduction, governance, risk, and compliance.

He has doctoral degrees in strategy and 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).

Dr Leesi Gborogbosi leverages his professional experience as a Certified Management Consultant (CMC); Fellow, Institute of Chartered Accountants of Nigeria; and The Institute of Management Consultants. He is a member of the Chartered Institute of Procurement & 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 International 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 was a member of the Strategic Management Society “Special Committee on Diversity and Inclusion”, Chicago, USA, with the responsibility of providing the Strategic Management Society Board of Directors with a good audit of where the Strategic Management Society stands with respect to inclusiveness in its activities.