Several media reports quoting extensively from a Reuters’ publication have erroneously suggested that the current administration awarded three (3) discretional oil blocks without a bidding process.
Reuters, had itself quoted extensively from a leaked report of the Petroleum Special Task Force led by Mr. Nuhu Ribadu saying that 3 discretional oil licences were awarded by the current Minister of Petroleum, Mrs. Diezani Allison-Madueke. Reuters was however not specific or clear about the kind of oil licences in question, and in doing so left a vacuum for speculations, confusion and misrepresentation of facts.
The report revealed loses in revenue and royalties to the federal government, as well as other lapses in the sector including exposing billions of dollars in unpaid debts owed Nigeria by some foreign oil companies.
The report also concluded that oil majors Shell, Total and Eni made bumper profits from cut-price gas, adding that Nigerian oil ministers handed out oil licences at their own discretion.
THEWILL can however authoritatively report today that the President Umaru Yar’Adua and President Goodluck Ebebe Jonathan administrations have issued only three (3) discretional licences for MARGINAL FIELDS and not oil blocks. The licences were issued between 2007 and 2010.
Marginal Fields are different from oil blocks.
Checks at the Department of Petroleum Resources (DPR) revealed that in May 2007 during the administration of late President Yar’Adua, Okwok and Ebok fields were awarded to Oriental Energy “as compensation for loses suffered as a result of boundary adjustment.”
In 2010, the President Jonathan administration awarded the Ubima and Otakipko Marginal Fields to All Grace Nigeria Limited and Green Energy Limited respectively, “as encouragement for commitment to small-scale gas projects.”
The three (3) awardees paid flat signature bonuses of $150,000 per field as stipulated in the pre-existing guidelines for the award of Marginal Fields, according to DPR records.
Discretional award of licences, though legal, does not follow the best practices of conducting open and transparent bids in the oil sector.
“It is a standard practice in the Nigerian oil and gas sector dating back to when the first reserves were discovered,” THEWILL was told.
A source at the DPR who asked not to be named in this report told THEWILL that the leaked Special Task Force report has caused a lot of confusion, as there is insufficient knowledge and understanding of the difference between an exploration block licence (OPL) and Marginal Field licence.
THEWILL further gathered that the Ribadu committee asked the various parastatals operating under the Ministry of Petroleum to submit information under oath during its work, which was complied with.
Marginal Field refers to an oil field that may not produce enough net income to make it worth developing by multinationals for several reasons. They usually contain high gas (hydrocarbon) with low oil reserves.
The guidelines for the farm out and operation of a marginal field, issued by the Office of the Petroleum Adviser on Petroleum & Energy to the President of Nigeria in July 2001, defines Marginal Fields as follows:
a. Fields not considered by license holders for development due to assumed economics under prevailing fiscal terms.
b. Fields that have an exploratory well drilled on their structure and which have been reported as oil and gas discoveries for more than 10 years.
c. Fields with crude oil characteristics different from current streams (such as with high viscosity and low API gravity), which cannot be produced with conventional methods or current technology.
d. Fields with high gas and low oil reserves
e. Fields that have been abandoned by the leaseholders for up to three years because of economic reasons, and
f. Fields that the present leaseholders may consider for farm out due to rationalization.
Nigeria is Africa's largest crude oil exporter, with an average daily output of about 2.5 million barrels per day (bpd), boosted by the current peace in the Niger Delta, following a peace deal between the federal government and agitated militants.
Nigeria’s gas reserves is also enormous making it the ninth biggest worldwide.
Sadly, decades of corruption in the sector has left many citizens impoverished without basic needs and all important infrastructure like stable electricity, good schools, and roads amongst others.
President Jonathan Monday ordered that the report of the Petroleum Special Task Force be submitted to him this Friday.
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