Tuesday, 4 March 2014
2012 Oil Bloc Sale: Before The Market Day? By Ifeanyi Izeze
The announcement that after nearly five years of near-zero serious exploration activities in the nation’s upstream oil sector, the Federal Government has finally decided to hold an oil bloc licensing round this year would have been greeted with a loud applause but for the fact that Nigeria as a nation has not been very fortunate in having leaders with keyed-in initiatives for a turnaround.
We have leaders ranging from those who had too much money but never knew what to do with it to those who fought corruption in the day time and in the night seasons corruptly devoured our treasury. And now, we have those who never seem to have a single idea on what to do on anything and have embarked on eternal planning exercise through outsourcing of almost all the executive functions to committees and panels in the name of carrying everybody along.
It would be recalled that the 2005, 2006 and 2007 licensing rounds were marred by series of allegations ranging from outright fraud to voodoo award of licenses to traders and housewives. We were told then that only companies willing to invest significantly in the country's infrastructure development projects and the power sector were pre-qualified to participate. But this turned out to be a big lie.
Awards were made to Asian oil companies that controversially secured rights of first refusal over some of the prolific oil blocs in exchange for commitment to invest in Nigerian infrastructure projects. The very lucrative oil blocs preferentially allotted in the 2005, 2006 and 2007 licensing rounds were based on the fact that all the recipients agreed to invest in the downstream sector. Some promised to invest in refineries, railways, power, roads and the Nigerian leg of the Trans Saharan Gas Pipeline.
At the time, some stakeholders complained that most beneficiaries of the federal government’s Right of First Refusal policy were companies whose credentials and antecedents were highly questionable.
True as alleged, since they got the offer, none of the companies given oil blocs based on the rights of refusal principle of backward integration did or is trying to do anything either in the nation’s oil downstream sub-sector or other infrastructural developments as mandated in the oil-for-infrastructure agreement.
Traditional upstream oil majors - Shell, Chevron, Mobil and Agip amongst others did not participate in the last and controversial 2007 bidding round, which held in the twilight of former President Olusegun Obasanjo’s administration. Their excuse was that the bid processes were not transparent. However, it was said later that the traditional European and American actors in the nation’s oil sector opted out of the bid round because of alleged government’s undue tilt towards the Chinese and Indian new entrants. Also, the western operators disdained the idea of oil –for-infrastructure.
The question is: has the federal government recovered all the acreages awarded under the oil-for-infrastructure deals as almost all the awardees including some indigenous Nigerian traders and PDP chieftains/ financiers failed to meet the conditions for such awards?
And, do we trust the current minister of petroleum who is or rather was a Shell director not to be biased in handling the licensing exercise to favour the traditional western IOCs?
As a responsible nation that wants to do business both with the traditional European and American oil operators and the Asian new entrants, it behooves our government to ensure that all the controversies including litigations arising from the discredited 2006 and 2007 oil bloc award exercises be effectively and fairly addressed. If not, the same controversies and allegations that marred the last exercise may also show up this time.
For instance, it has been recently alleged that the traditional western operators were bent on discrediting the Indian, Chinese and Korean firms in the forthcoming exercise by making false presentations to the federal government. According to insinuations, the well-established Western oil companies were not happy with the threats posed by the forays being made by the Chinese, Indians and Koreans into Nigeria’s oil sector.
Also, we need to address the serious allegation or rather the perception that traditional European and American multinational operators in the nation’s oil sector have a hidden agenda in the forthcoming bid round as they were allegedly responsible for the clamour or rather pressure to reverse whatever was done in the controversial oil-for-infrastructure licensing rounds of the Obasanjo era.
From all indications, there is an obvious misrepresentation of the issues and facts of the struggle for the soul of the nation’s oil sector by the eastern and the western interests. This would not in any way help the nation in its avowed determination to reposition its oil and gas sector as each of these foreign groups may want to undermine the other at the expense of Nigeria.
Let’s not forget that plans to conduct bid rounds in 2010 were aborted under frivolous excuses of the non-passage of the Petroleum Industry Bill (PIB), coupled with pending cases before the courts and arbitration involving some multinational oil companies and the government. Most of these cases, which had to do with the Production Sharing Contracts governing some oil fields, are yet to be thrashed out. So what are we going to do about them?
Another issue is whether the federal government is going to go ahead with the licensing round without resolving the serious controversies surrounding the renewed effort to re-package the PIB.
Neither the federal government nor any of its agencies has addressed the issue of alleged hijack of government control of the oil sector. It has been seriously alleged that our current Petroleum Minister, Diezani Allison-Madueke and the new director of the Department of Petroleum Resources (DPR), Osten Oluyemisi Olorunsola are both from Shell Petroleum Development Company of Nigeria. And these are the two critical determinants to what goes in and comes out as the repackaged PIB. The duo is also the sole determinant on who gets what oil blocs in the forthcoming licensing round.
Except we are saying that the proposed 2012 oil bloc award will be to compensate the traditional international oil operators (IOCs) whose agents have be positioned in government to work for their interest. Otherwise, we must thread with caution.
IFEANYI IZEZE IS AN ABUJA-BASED CONSULTANT ON STRATEGY AND COMMUNICATION (firstname.lastname@example.org; 234-8033043009)