After becoming key players in the nation’s oil and gas industry in recent years, indigenous firms are now struggling with a debt burden of N4.9tn as they try to maintain the assets they acquired through the Federal Government’s marginal field programme and recent divestments by oil majors, The Punch reports.
Over 130 blocks are in the control of indigenous operators, who were awarded some 50 marginal blocks through discretionary allocations in the 1990s, another 24 through marginal fields bidding round in 2003, and 60 more blocks through conventional bidding rounds in 2005 and 2007, according to the Oxford Business Group. But total oil production from the local firms fell to 46.01 million barrels last year from 80.17 million barrels in 2015, bringing their share of national production down to 6.4 per cent from 10.3 per cent, the February report of the NNPC showed.
Several of the companies, including Seplat Petroleum Development Company Plc and Neconde Energy Limited, suffered severely from the shutdown of the Trans Forcados Pipeline, their main export route, for more than a year. As of the end of December 2016, loans to the oil and gas sector constituted 30.02 per cent of the gross loan portfolio of the nation’s banking system as credit to that sector grew from N4.51tn to N4.89tn, according to latest Financial Stability Report of the Central Bank of Nigeria.