Effective cost control a key strategy for efficient exploitation of Nigeria marginal oil fields: case study of Ogbelle, Umusadege, Ibigwe and Ebendo”

Marginal field development has become a topical issue globally especially with the impending global peak oil. Countries are currently adopting strategies towards oil and gas exploration and development that will guarantee those continued returns and relevance in the global energy circle. The Nigerian marginal field programme is one of such strategy which is aimed at increasing recoverable oil reserve and production as well as boosting the economy through indigenous participation in the oil industry. This study analyses the profitability of investment in the marginal fields in Nigeria by examining the economics of marginal field development and the impact of the various economic variables like oil price, discount rate and production cost on the profitability. It also evaluates the historic impact of marginal field development on the Nigerian economy by reviewing the level of achievement of the objectives of the Nigerian marginal field development initiatives. More importantly evaluation of cost control strategies on marginal fields’ investment, profitability and production cost were undertaken. The study found that given the current economics of oil and gas production and given the average obtainable volumes of the oil from the marginal fields in Nigeria, the fields would yield very substantial net back for investors. Furthermore, the study revealed that poor cost control was one of the key adversary to the growth of marginal oil fields operations in Nigeria. However, with prudent cost control measures and strategies, given the projections into the next five year, at the current rate of growth of marginal field production volumes, it will contribute substantial volumes to aid the increase in national production rate in Nigeria.