How marginal oil fields award didn’t follow stipulated regulations – NEITI

Bisola David
Bisola David
NEITI, oil producers partner on transparency, accountability

The Nigeria Extractive Industries Transparency Initiative alleged that the Nigerian Upstream Petroleum Regulatory Commission violated its own rules when executing the 2020–2021 marginal fields award.

The Punch reported that the agency reported in the most recent NEITI 2021 Oil and Gas Industry Report that the NUPRC granted certain corporations marginal fields before the companies paid their signing bonuses.

According to a review of the report by our correspondent on Friday, NEITI further said that the upstream regulator of the oil sector approved payment of signing bonuses by businesses that did not participate in the marginal fields award process.

In addition to maintaining a record with a list of contracts and their various contractual arrangements, NUPRC is in charge of providing the regulatory framework for the numerous contracts in Nigeria’s upstream oil and gas business.

Joint Operating Agreements, Production Sharing Contracts, and Sole Risk were the types of operating contracts used in Nigeria’s oil and gas sector in 2021.

Repayment agreements, Modified Carry Agreements, and Service Contracts are a few more. While MCA and RA are financial arrangements for joint ventures, SCs are a variant of the PSC model.

Some of these agreements are often signed by the Nigerian National Petroleum Company Limited on behalf of the federation, and copies of the agreements are made on behalf of the federation.

Regarding the Federal Government’s marginal field bid round, which was also a 2020 contract, NEITI stated that, in June 2020, 57 fields were included in a marginal field bid procedure that was declared in accordance with the guidelines established by the NUPRC (the Department of Petroleum Resources at the time).

The NEITI 2021 oil sector report, it stated, offered information about the procedure after it was finished. It also stated that the marginal field award process was administered via an electronic portal.

NUPRC reports that 665 applications were submitted for the 2020 Marginal Field bid phase. Out of the procedure, 106 companies were awarded in the marginal field bid round.

However, it should be mentioned that, according to the 2021 audit information provided by NUPRC, just five companies had paid out signature bonuses.

“All successful applicants whose names appear in the Notice of Preferred Bidder Status are required by commission regulation to have paid the signing bonus before being awarded.

According to NEITI, “it should be noted that four additional companies that were not listed among the awardees paid signature bonuses on 2020/2021 marginal fields award.”


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