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In the licensing exercise through which Nigeria offered its marginal fields, marginal fields are described as:

• Fields not considered by license holders for development because of assumed marginal economics under prevailing fiscal terms. • Fields which have had at least one exploratory well drilled on the structure and have been reported as oil and gas discoveries for more than 10 years. • Fields with crude oil characteristics different from current streams which cannot be produced through conventional methods or current technology. • Fields with high gas and low oil reserves. • Fields that have been abandoned by the leaseholders for upwards of 3 years for economic reasons. • Fields which the present leaseholders may consider farming out due to portfolio rationalization.

The common challenges which emerge for marginal field development and production are:

• Oil and gas prices, especially the predictions for the productive phase of the project.

• The field’s characteristics (i.e. water depth, reservoir pressure, reservoir temperature, sulphur content, oil viscosity, reservoir permeability, etc).

• The volume of the recoverable reserves and their rate of extraction.

• The degree of collaborative efforts between license holders.

• The field’s location relative to existing infrastructure.

• The hurdle rates utilised by operators.

• Legislative provisions, especially the applicable fiscal regime.