Economics of Nigerian Marginal Oil Fields

摘要

In this paper, a new contractual agreement is proposed for therndevelopment of marginal oil fields in the Nigerian prolificrnhydrocarbon sedimentary basins. The proposed agreement is arnmodification of the existing agreements taking intornconsideration the special nature of marginal oil fields. Detailedrneconomic analyses were carried out to assess the feasibility ofrnthe agreement. The economic analyses involved cash flowrnmodeling, project profitability analysis, project sensitivityrnanalysis and risk modeling using available and generallyrnaccepted economic, financial and technical data about thernNigeria operating environment. The final results from thisrnstudy show that investing in the development of Nigerianrnmarginal oil fields is a worthwhile option. The results showrnthat the proposed agreement leads to favorable return onrninvestment for all the parties involved. Project sensitivityrnanalysis shows that if the combined cost of seismic survey andrnsignature bonus is increased by more than 10%, the projectrnbecomes uneconomic. Also, if the price of oil falls belowrnUS$18.07, the project would have to be re-evaluated becausernthe discounted pay back period (DPBP) would exceed thernexpected project life. Furthermore, risk analysis shows that asrnthe NPV (net present value) increases, the risk level associatedrnwith such NPV also increases. Options available for financingrnmarginal oil fields development are also presented.