OML 11 Licence Not Revoked, NPDC Becomes Operator May 2

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  • OML 11 Licence Not Revoked, NPDC Becomes Operator May 2

The licence of a joint venture partner in Oil Mining Lease 11 has not been revoked as speculated but stakeholders are concerned about the recent presidential directive on the operatorship of the oil block, OKECHUKWU NNODIM reports

The licence for Oil Mining Lease 11 has neither been revoked nor withdrawn from Shell Petroleum Development Company, rather the operatorship of the oil block was transferred from the SPDC to the Nigerian Petroleum Development Company.

Senior officials from the Federal Ministry of Petroleum Resources and others in the OML 11 joint venture explained that the directive from President Muhammadu Buhari to the Group Managing Director of the Nigerian National Petroleum Corporation, the parent firm of NPDC, was that the operatorship of the block should be taken over by NNPC.

Sources familiar with the issue told our correspondent in Abuja on Friday that aside from the fact that the process of getting back the licence for such oil block was tedious, the joint venture partners in OML 11 were not just NPDC and SPDC.

They stated that two other international oil companies, Total and Agip, were also partners in the oil block.

This came as stakeholders in the oil sector expressed concern over the presidential directive and urged the Federal Government to be more transparent in handling the matter.

The media reported on Wednesday that Buhari had ordered the NNPC to take over the operatorship of the entire OML 11 from the SPDC.

According to a letter from State House, Abuja to the Group Managing Director of NNPC, dated March 1, 2019, with reference number SH/COS/24/A/8540 and signed by the Chief of Staff to the President, Abba Kyari, the President’s directive was clearly stated that the entire operatorship of OML 11 should be taken over by the NNPC/NPDC not later than April 30, 2019.

The NPDC is the flagship oil exploration and production subsidiary of the NNPC and the liaison office of the company acknowledged the receipt of the letter on March 5, 2019.

The letter from the Presidency to the NNPC, which had its title as, ‘Operatorship of Entire Oil Mining Lease 11,’ read in part, “Kindly note that the President has directed NNPC/NPDC to take over the operatorship from Shell Petroleum Development Company of the entire OML 11 not later than 30 April 2019 and ensure smooth re-entry given the delicate situation in Ogoniland.”

It added that the President has “directed NNPC/NPDC to confirm by 2 May 2019 of the assumption of the operatorship.”

Following the presidential directive, it was widely speculated that the President had withdrawn the licence of Shell, but this was refuted by partners in the JV as well as informed officials at the FMPR.

“What the directive of the President is all about is operatorship. The letter is very clear that operatorship should be transferred from one party of the JV to another party. I’ve seen a copy of the letter and it did not talk about the licence. There is no mention of withdrawal or revocation of licence in that letter,” an official in one of the firms in the joint venture, who spoke to our correspondent in confidence, said.

An official at the FMPR also stated that “whoever says the letter mentioned withdrawal or revocation of licence is just being unnecessarily sensational about that letter because there was nowhere in the letter where such was mentioned. The letter is very clear that operatorship should be given to another party.

“How can you operate if you are revoking the licence? If you withdraw the licence, who will operate the field? This is because you have to go through another round of processes before you can get the licence. Shell and NPDC are not the only partners; Total and Agip are also involved.

“So the licence is held on behalf of the partners and as we speak, the holder of the licence on behalf of the partners now is NPDC, of course. If the licence was revoked, do you think the NPDC will continue to run the asset? People don’t understand the scope of OML 11. They think OML 11 is just Ogoniland. No, that’s just a small fraction.”

OML 11 lies in the southeastern Niger Delta and contains 33 oil and gas fields of which eight are producing as per 2017. In terms of production, it is one of the most important blocks in Nigeria.

The terrain is swamp to the south with numerous rivers and creeks. Port Harcourt is located in the northwest of the block, while the major yard and logistics base at Onne is located by the Bonny River. The Bonny oil terminal – the largest in Nigeria – and Nigeria LNG are both located in Bonny.

When asked to comment on the issue, the Group General Manager, Group Public Affairs Division, Ndu Ughamadu, told our correspondent that he had not seen the document and had received no briefing on the matter and so would not comment.

“I’ve not sighted it, neither have I been briefed. Until I sight the authentic document and I’m briefed on it, that’s when I will comment on it,” Ughamadu said.

In their reaction, the Movement for the Survival of the Ogoni People faulted Buhari’s order to the NNPC to take over the operatorship of OML 11 in Ogoniland from SPDC.

MOSOP specifically said it had resisted attempts by anybody to resume oil production in Ogoniland without consulting the people of the area.

MOSOP President, Fegalo Nsuke, who made this remark, said it was wrong for Ogoni’s resources to be taken away and shared without involving Ogoni people.

Nsuke, who insisted that he was not a factional president of MOSOP, said, “It is unfair for us as Nigerians to live in a country and they (government) will take away our resources and share it amongst themselves. They take away our land and leave us with nothing; when we protest, they kill us.

“They (government) take a crucial decision without consulting with the Ogoni people, we disapprove of that and strongly kick against that. We have resisted the decision from the outset. We should be part of such a critical decision; we cannot live in a country where everything will be taken away from us and we will be left only to bear the consequences of oil production.”

Also, the Lagos Chamber of Commerce and Industry called on the Federal Government to be transparent on how it handled the matter.

The Director-General, LCCI, Muda Yusuf, told our correspondent that the government needed to make more facts about the matter public.

He said, “We need to have the facts about this matter. All the facts must be laid on the table concerning the movement of operatorship of OML 11 from Shell to NNPC. Now, did the government say it was taking it over because Shell couldn’t operate it? Of course, not.

“So I go back to my point that the government needs to explain further in the spirit of transparency that this government has been preaching. The reasons behind this decision need to be clearly stated and put in the public domain to avoid misinformation or to avoid people misconstruing the intention of the government.”

Yusuf observed that there had been concerns as to whether due process was followed in the transfer of operatorship of OML 11, adding that this was why the government needed to provide further explanations.

He added, “The reasons must be put on the table and it must also be established that due process has been followed. I am sure there must be some procedure in taking over the operatorship of such asset. So, was that procedure followed?

“We are a country that is guided by rules, regulations and standards through which we manage such very strategic assets. So, I think all the processes should be examined and, therefore, there is a need for proper disclosure and circumstances that have led to this decision.”

He, however, noted that the issue must not be politicised, adding that “for those who think this has to do with politics, my word to them is to ask for more information; we need to hear from government and Shell.”

On his part, the leader of Conscience of Ogoni People, Gani Topba, said although Buhari took the right decision, the NPDC must reverse all actions it had taken concerning the drilling of oil in Ogoniland.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]; Tel: +2347065163489.

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