Marginal oil fields in Nigeria, some of which the International Oil Companies (IOCs) have abandoned for over 10 years previously, are now being awarded to indigenous oil companies. Due to difficulty with raising development finance domestically, some of the indigenous Marginal Field Operators (MFOs) have resorted to allowing foreign-listed Financial Partners (FP) to'carry' their share of development costs. We test the optimality of such'carried' cost arrangements by using the discounted cash flow method to analyse the economic viability of two model marginal fields (one onshore and the other offshore) in the Niger Delta/Gulf of Guinea region. Four different scenarios (sole risk [MFO], sole risk [FP], joint venture without carry, and joint venture with carry) for each model are compared. The empirical results appear to imply that marginal field operators are better off if they can contribute their share of development costs, by equally sourced debt and equity financing domestically, than when they are carried by a foreign financial partner. The computed net present value (NPV), NPV per barrel, modified internal rate of return (MIRR) and payback period all show that carrying of interest favours the FP over the MFO in a joint venture arrangement. Additionally, oil price and Petroleum Profit Tax (PPT) have the greatest impact on NPV in both models. Key Words: marginal field · operator · financial partner · 'carried' cost · net present value
Notwithstanding the fact that commercial oil discovery has been fifty-plus years in Nigeria; the Nigerian natural gas industry is known to be a developing industry. Thus, understanding the huge potential this industry presents to its economy, the Nigerian government has sought to implement policies that will bring about development in this industry. The paper seeks to examine the policies and the legal framework (if any), in order to ascertain to what extent the policies have been able to develop the industry and if not, why? In addition, the paper examines the adequacy or otherwise of the present legal framework. The paper finds that the successful and sustainable development of the natural gas industry hinges on the existence of adequate legal framework, as policies can only serve as aspirations and sought-after-goals without the backing of sufficient legal framework to support their implementation. The paper finds that in light of shale gas development in Nigeria's investors cum market geography, time is fast running for Nigeria as there is the urgent need to address the situation as Nigeria is gradually losing not just investors but her natural gas market as well.