London-based explorer ADM Energy has pre-qualified to bid with a high-profile local partner in Nigeria’s Marginal Field Bid Round, under which the Department of Petroleum Resources is offering 57 fields across the Niger Delta shallows, onshore and swampy terrain.
ADM is targeting a shallow-water asset for which competition is understood to have intensified in recent days as local players team up with foreign suitors to form bidding consortia.
ADM will pursue participation in the second stage of the licensing exercise in “exclusive technical partnership” with OilBank International, an indigenous oil and gas service management firm, and the duo hope to submit technical and commercial bids by end-August.
“The 2020 marginal field licensing exercise, the first to be held since 2003, is a tremendous opportunity to invest in an undervalued, near-term production asset during a period of unprecedentedly low oil prices," said to ADM chief executive Osamede Okhomina.
Listed on the London, Frankfurt and Berlin stock exchanges, ADM intends to convert its memorandum of understanding with OilBank into a substantive agreement in the event that OilBank’s application for a marginal field is successful and a licence is awarded.
OilBank director Biodun Otunola is known in Nigeria for infrastructure development, while OilBank’s chairman and driving force is Prince Arthur Eze, the founder-chief executive of two producing Nigerian independents, Atlas Petroleum and Oranto Petroleum, which are both active regionally.
ADM currently partners local operator Yinka Folawiyo Petroleum on the Aje field in the Dahomey basin, located offshore on OML 113, but earlier told Upstream it aims to leverage interest from German industry and capital to expand in the Niger Delta and beyond.
An unfolding partnership with OilBank, announced this week, may be the key to attracting additional foreign partners into backing ADM’s Africa-wide expansion plans as Eze’s upstream portfolio reaches into several frontier plays from Sierra Leone, Liberia, Togo, Ivory Coast, Chad, Cameroon and Equatorial Guinea.
Over the past decade, Eze’s deal-making track record across the continent has involved myriad players including Chevron, Pioneer Natural Resources, Roc Oil, Lukoil, Noble Energy, Kosmos Energy, Canada’s Nexen Petroleum, Malaysia’s Petronas and Norway’s DNO.
“ADM earlier entered into a strategic alliance with Trafigura, securing up to $100 million in pre-financing, so we are in a strong position to evaluate and finance investment into attractive oil and gas assets,” said Okhomina.
The idea behind the current round is to wrest dormant fields, mostly from foreign companies active in Nigeria, and re-allocate them to indigenous outfits even though formal legal title will remain with the majors, making the assets hard to encumber.
Upstream understands the DPR aims later this year to award such contractual rights for as many as possible of these under-performing assets to local companies selected from a shortlist of 150 competitors, to be drawn up before the end of August.
Several E&P players attempted to prevent the DPR from revoking their licences and auctioning them to fresh suitors alongside the marginal fields pre-designated for the round, but their application for an interlocutory injunction was rejected by the Federal High Court.
These included Associated Oil & Gas, Dansaki Petroleum, Bayelsa Oil Company, Bicta Energy, Del-Sigma Petroleum, Sogenal Energy, Independent Energy, Sahara Energy, African Oil & Gas Ltd. and Goland Petroleum.