Marginal oil field operators blame poor performance on multiple taxes

FILE PHOTO

They are a myriad of challenges bedeviling operations in marginal oil fields, operators say.

Marginal oil field operators in Nigeria’s petroleum industry on Friday blamed the slow pace of progress in their operations to a myriad of factors, especially multiple taxation.

Marginal oil fields are either low producing or non-producing fields that are held by the multinational oil companies and are reaching the end of their commercial life.

Nigeria’s marginal oil fields are mostly those relinquished by the operated international oil companies, IOCs, for their low oil reserve capacity, and taken over by some indigenous oil companies with the technical competence to produce an average of about 10,000 barrels per day, or less.

The Managing Director of Niger Delta Exploration and Production Limited, Layi Fatona, said in a presentation at the just-concluded 2013 Annual Oloibiri Lecture Series and Energy Forum of the Society of Petroleum Engineers, SPE, in Lagos that the problem of multiple taxation by Local, States and Federal Governments, is affecting start-up of the asset being developed by marginal oil field operators in the country.

Mr. Fatona also identified poor technical competence, fluctuating assistance from foreign equity partners, and low funding capacity of indigenous players among other issues posing serious concerns to the operators.

He said that the inability of operators to access funds and the right calibre of technical personnel have also made the marginal field’s asset unattractive to investors, pointing out that the only way to enhance indigenous participation in the Nigerian petroleum industry is by making the asset more attractive and bankable.

“There should be timely agreement with lease holders and government agencies in all marginal field operations,” he said. “Government should assist indigenous marginal field operators through import duty waivers and tax breaks and also improved local bank involvement by reducing rates.”

Noting the contributions of marginal oil field operators to the development of the Nigerian economy and the expansion of the oil and gas operational frontier, Mr. Fatona expressed regrets that these issues are posing enormous challenges to most operators.

And while he commended Federal Government’s policies to promote indigenous participation in the petroleum industry, Mr. Fatona noted that the success of the indigenous players’ incursion into field development and production has remained ‘marginal’, because of the identified problems.

He said if there was a more structured guidance for the unleashing of entrepreneurial energies of Nigerians, the marginal oil operators will flourish. Mr. Fatona said that indigenous companies are facing legislative, financial, logistical and technical challenges on the way to their first oil or gas.

“The challenges must be adequately analysed and remedial actions fully enshrined in necessary legislation, particularly at this time that the National Assembly is deliberating on a new legal and regulatory framework for the country through the passage of the Petroleum Industry Bill, PIB,” he said.


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