In a statement published by the Department of Petroleum Resources (“DPR”) on 30 June 2020, the DPR has assured stakeholders that reforms are being implemented to ensure that the 2020 bidding round would be transparent, and not encounter similar issues as the 2003 bidding round.
According to the DPR, the current framework will ensure that any disagreement arising among awardees and their partners post-award would first be referred to the Nigerian Oil and Gas Alternative Dispute Resolution Centre in DPR, thus effectively reducing the timeline for disputes resolution, as protracted disputes in the past usually delayed the exploitation of the marginal fields.
We applaud the DPR for these steps, while noting that there are historical issues that have remained unresolved. For instance, in the context of bankability, it is still not clear whether the interest acquired by the awardee under the Farm-out is a lease or sublease, although the current Guidelines have provided more clarity on the standalone nature of the right of an awardee, which consequently means that it could enforce same without having to go through the OML holder.
