May 31, 2010
Across the oil producing world, known prolific but unexploited acreages are assigned to prospectors for the purpose of increasing production capacity or boost reserves. But in Nigeria, everything that happens in the oil sector-upstream and downstream is an aberration of what obtains elsewhere. Awards of oil blocs in this country have become an exercise to ingratiate political loyalists or close associates of powers of the day.
Across the oil producing world, known prolific but unexploited acreages are assigned to prospectors for the purpose of increasing production capacity or boost reserves. But in Nigeria, everything that happens in the oil sector-upstream and downstream is an aberration of what obtains elsewhere. Awards of oil blocs in this country have become an exercise to ingratiate political loyalists or close associates of powers of the day.
The assurance by the Minister of Petroleum Resources, Diezani Allison- Madueke that the planned 2010 oil bloc licensing round would be transparently conducted would have been seen as a flicker of light in the dim arena of the nation’s upstream business but for the glaring oversight of the yet-to-be-resolved controversy involving both the Operating International Oil Companies (IOCs) and most of the Asian oil firms favoured in the Obasanjo’s oil-for-infrastructure deals.
The suspicion: Is the 2010 licensing round going to be a balancing act to compensate the previously marginalized or rather protesting IOCs?
It would be recalled that the old brigade of IOCs in the nation’s oil sector either decisively boycotted or were deliberately excluded from most of the licensing rounds carried out by the Obasanjo regime especially under the oil-for-infrastructure arrangement. This is an issue that has not been adequately addressed, and need to, if not, the proposed 2010 licensing round may be viewed with serious suspicion as the new Petroleum Minister allegedly grew up in the household of the IOCs community.
The issue of the controversial oil blocs dubiously obtained by some Asian firms with their Nigerian cronies under the oil-for-infrastructure waayo is yet to be properly addressed and there is a great need for President Jonathan to pick up from where the late President Yar’adua stopped on the issue.
Most of the Asian firms that got lucrative oil blocs under the oil-for-infrastructure scheme are still keeping the acreages and have decidedly abandoned the infrastructural development side of the deal. So who is fooling who? These companies were awarded the blocs based on clearly stated and agreed terms under the oil-for-infrastructure arrangement. And since almost all of them have failed to live up to the infrastructure side of the contract, the wise thing for any serious and development-minded government would have been to recover the blocs as it is now obvious that the terms for the awards in the first instance have been breached. Worst still, most of these so called investors did not even pay the required signature bonus fees. Those that tried to be ‘honourable’ paid not more than 20-30 percent of the fee. Up Nigeria!
A Korean consortium accepted to construct Port Harcourt- Maiduguri railway line and as a result was granted the right of first refusal on Oil Prospecting Leases (OPLs) 2002, 2003, 2005 and 2009. And in the 2007 bid round, the group also got OPLs 321 and 323 under the same oil-for-infrastructure scheme.
A Chinese Consortium also had right of first refusal on OPLs 2005, 2006 and second right of first refusal on OPL 226, 231, 2001 and 2011. Another subsidiary of the Chinese interest, agreed to invest $2 billion to revamp the Kaduna refinery on the basis of which it was given right of first refusal on four oil blocs in addition to the four given them in the 2006 mini-bid round making it seven in all.
An Indian interest that got Ajaokuta, the entire deposit of iron ore in Itakpe, and Delta Steel under mysterious circumstances was granted right of first refusal on OPLs 225 and 275 and second right of first refusal on OPLs 226 and 290. This consortium got the concession by promising the federal government that it would construct a 550 metric tones per day offshore gas gathering facility, 550 MW independent power plant (without specific mention of the location) and a compressed natural gas facility in Lagos and Abuja. How can anybody describe such promise but to say that it was an outright 419?
Another Indian business interest also got right of first refusal on OPL 250 by pledging to construct Lagos- Benin- Onitsha- Owerri railway lines. This same consortium in the 2006 mini-bid round promised to invest $6 billion in a private refinery, IPP Project, and the same railroad and got away with two lucrative acreages- OPL 279 and 258. And up till today not even a baseline or impact assessment study has been carried out for any of the projects.
We need to know whether these consortiums still have anything to do with the oil blocs or whether the acreages have been retrieved and are among those that are being thrown up for sale.
The federal government had been told how to recover these blocs. It is just rational that the Jonathan team pursues that first, rather than the current hurry to again ‘dash out’ the remaining acreages to maybe create another bunch of ‘funny’ oil investors.
In the case of the Korean National Oil Company (KNOC) that dragged the federal government to court over the revocation of two oil blocks allocated to it under the scheme, the consortium with the help of the Court has kept the two lucrative oil blocs despite the fact that it has abandoned the infrastructure side of the deal.
The Federal High Court sitting in Abuja, on Thursday August 20 2009 clearly stated that “The President of the Federal Republic of Nigeria has the power to revoke such licenses by virtue of section 5 (1) of the 1999 Constitution of the Federal Republic of Nigeria. But section 2 of the Petroleum Act 1969 confers on the Minister of Petroleum (and not a Minister of State) the power to revoke oil prospecting licenses.” This was the problem with the Yar’adua’s effort.
It was because there was no substantive minister that the court ruled that the President “has no power to void the allocation of OPLs 321 and 323 belonging to KNOC Nigerian East Oil Company Limited, KNOC Nigerian West Oil Company Limited, Tulip Energy Resources Nigeria Limited and NJ Exploration Limited, in the manner it was done.”
Good enough that the judge, Justice Abudullahi (rtd), clearly stated that, “If the letter of revocation sent to the applicants (Asian investors and their masquerade Nigerian collaborators) had been authored by the senior Minister, his finding (ruling) would have been different.”
Now that we have a substantive minister of petroleum resources, what has been done to retrieve those lucrative oil blocs obtained by trick? This is the moral challenge to both President Jonathan and Allison-Madueke. The right thing to do should be for the President to now revoke the awards in conformity with stated constitutional procedure because it must be done whether today or tomorrow no matter who is involved in the scam.
IFEANYI IZEZE IS AN ABUJA-BASED CONSULTANT ON STRATEGY AND COMMUNICATION ([email protected])
The assurance by the Minister of Petroleum Resources, Diezani Allison- Madueke that the planned 2010 oil bloc licensing round would be transparently conducted would have been seen as a flicker of light in the dim arena of the nation’s upstream business but for the glaring oversight of the yet-to-be-resolved controversy involving both the Operating International Oil Companies (IOCs) and most of the Asian oil firms favoured in the Obasanjo’s oil-for-infrastructure deals.
The suspicion: Is the 2010 licensing round going to be a balancing act to compensate the previously marginalized or rather protesting IOCs?
It would be recalled that the old brigade of IOCs in the nation’s oil sector either decisively boycotted or were deliberately excluded from most of the licensing rounds carried out by the Obasanjo regime especially under the oil-for-infrastructure arrangement. This is an issue that has not been adequately addressed, and need to, if not, the proposed 2010 licensing round may be viewed with serious suspicion as the new Petroleum Minister allegedly grew up in the household of the IOCs community.
The issue of the controversial oil blocs dubiously obtained by some Asian firms with their Nigerian cronies under the oil-for-infrastructure waayo is yet to be properly addressed and there is a great need for President Jonathan to pick up from where the late President Yar’adua stopped on the issue.
Most of the Asian firms that got lucrative oil blocs under the oil-for-infrastructure scheme are still keeping the acreages and have decidedly abandoned the infrastructural development side of the deal. So who is fooling who? These companies were awarded the blocs based on clearly stated and agreed terms under the oil-for-infrastructure arrangement. And since almost all of them have failed to live up to the infrastructure side of the contract, the wise thing for any serious and development-minded government would have been to recover the blocs as it is now obvious that the terms for the awards in the first instance have been breached. Worst still, most of these so called investors did not even pay the required signature bonus fees. Those that tried to be ‘honourable’ paid not more than 20-30 percent of the fee. Up Nigeria!
A Korean consortium accepted to construct Port Harcourt- Maiduguri railway line and as a result was granted the right of first refusal on Oil Prospecting Leases (OPLs) 2002, 2003, 2005 and 2009. And in the 2007 bid round, the group also got OPLs 321 and 323 under the same oil-for-infrastructure scheme.
A Chinese Consortium also had right of first refusal on OPLs 2005, 2006 and second right of first refusal on OPL 226, 231, 2001 and 2011. Another subsidiary of the Chinese interest, agreed to invest $2 billion to revamp the Kaduna refinery on the basis of which it was given right of first refusal on four oil blocs in addition to the four given them in the 2006 mini-bid round making it seven in all.
An Indian interest that got Ajaokuta, the entire deposit of iron ore in Itakpe, and Delta Steel under mysterious circumstances was granted right of first refusal on OPLs 225 and 275 and second right of first refusal on OPLs 226 and 290. This consortium got the concession by promising the federal government that it would construct a 550 metric tones per day offshore gas gathering facility, 550 MW independent power plant (without specific mention of the location) and a compressed natural gas facility in Lagos and Abuja. How can anybody describe such promise but to say that it was an outright 419?
Another Indian business interest also got right of first refusal on OPL 250 by pledging to construct Lagos- Benin- Onitsha- Owerri railway lines. This same consortium in the 2006 mini-bid round promised to invest $6 billion in a private refinery, IPP Project, and the same railroad and got away with two lucrative acreages- OPL 279 and 258. And up till today not even a baseline or impact assessment study has been carried out for any of the projects.
We need to know whether these consortiums still have anything to do with the oil blocs or whether the acreages have been retrieved and are among those that are being thrown up for sale.
The federal government had been told how to recover these blocs. It is just rational that the Jonathan team pursues that first, rather than the current hurry to again ‘dash out’ the remaining acreages to maybe create another bunch of ‘funny’ oil investors.
In the case of the Korean National Oil Company (KNOC) that dragged the federal government to court over the revocation of two oil blocks allocated to it under the scheme, the consortium with the help of the Court has kept the two lucrative oil blocs despite the fact that it has abandoned the infrastructure side of the deal.
The Federal High Court sitting in Abuja, on Thursday August 20 2009 clearly stated that “The President of the Federal Republic of Nigeria has the power to revoke such licenses by virtue of section 5 (1) of the 1999 Constitution of the Federal Republic of Nigeria. But section 2 of the Petroleum Act 1969 confers on the Minister of Petroleum (and not a Minister of State) the power to revoke oil prospecting licenses.” This was the problem with the Yar’adua’s effort.
It was because there was no substantive minister that the court ruled that the President “has no power to void the allocation of OPLs 321 and 323 belonging to KNOC Nigerian East Oil Company Limited, KNOC Nigerian West Oil Company Limited, Tulip Energy Resources Nigeria Limited and NJ Exploration Limited, in the manner it was done.”
Good enough that the judge, Justice Abudullahi (rtd), clearly stated that, “If the letter of revocation sent to the applicants (Asian investors and their masquerade Nigerian collaborators) had been authored by the senior Minister, his finding (ruling) would have been different.”
Now that we have a substantive minister of petroleum resources, what has been done to retrieve those lucrative oil blocs obtained by trick? This is the moral challenge to both President Jonathan and Allison-Madueke. The right thing to do should be for the President to now revoke the awards in conformity with stated constitutional procedure because it must be done whether today or tomorrow no matter who is involved in the scam.
IFEANYI IZEZE IS AN ABUJA-BASED CONSULTANT ON STRATEGY AND COMMUNICATION ([email protected])
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