Infographic: Marginal fields and its poor performance

Marginal fields are oil and gas reserves usually too small for production to be economically viable for large oil companies. They are usually awarded to indigenous companies to explore considering the size of the reserves. There is widespread agreement that past awards of marginal oil fields in Nigeria have not delivered maximum value, either for many of the companies involved or the nation. Most notably, only seven of twenty-four fields awarded in 2003 have produced oil.

Analysis has shown that there are six key steps in the life of a marginal field and government policies and practices have affected field development at every step. It is clear that the goals underlying past awards—the chief of which was boosting indigenous participation—seem broadly sensible and in line with deeper trends in the country’s oil & gas sector. At the same time, FGN appears to have arrived at its goals largely in the absence of any larger strategic decision-making such as inputs to refining, manufacturing and power industry.

There has also been the FGN’s tendency to award oil blocks based on short-term political criteria, its over-reliance on IOC prospecting and field classification, and the prevailing lack of clarity around geo-data management. A bigger challenge lies in the inability on infrastructure deficits at or around the fields, lack of industry experience, the high cost of money and low depth of money supply in Nigeria, Poor oil metering tools, insecurity and also operational challenges has inhibited the prospects of marginal fields.

Please find below an infographic that explain marginal fields and also download the graphical pdf that details challenges and recommendations. Report on marginal fields was based on a private study and graphics were designed by BudgIT.