Market News

Eleven marginal field licences may be re-awarded to original owners over one year after the fields were revoked.

The development is coming on the backdrop of the implementation of the Petroleum Industry Act, assented to months ago by President Muhammadu Buhari.

In April last year, the Federal Government had revoked the eleven Oil Mining Licences (OML) stating that the companies had enough time to turn the assets around but were unable to do so.

The development, which happened amidst criticisms affected fields, which included Atala Field operated by Bayelsa Oil Company Limited, Dawes Island Field operated by Eurafric Energy Limited, Ofa Field operated by Independent Energy, Ekeh Field operated by Movido Exploration and Production Limited, and Ke Field operated by Del-Sigma Petroleum Limited.

The Guardian had reported that a number of the companies have reportedly gone far in their operations and were simply waiting for the Department of Petroleum Resources (DPR) to grant necessary permits to conduct well tests, start production, evacuate and sell before the licences were revoked.

The Guardian had learnt that some of the companies have reportedly produced oil, stored in storages as some currently have their crude in export pipelines.

The licences were offered in 2013 and the companies were expected to bring the fields into production in five years but were offered an extension.

Reportedly, affected awardees had collectively petitioned President Muhammadu Buhari, who is also the Minister of Petroleum, highlighting the effect of the revocation on their business, financial exposure (bulk of which are from Nigerian Banks), the Nigerian economy in general and that of host communities in particular.

However, an approval given by the president via a letter dated November 24th, 2020, referenced PRES/88/MPR/72, did not fly as prevailing challenges and interest delayed the development.

With the breakdown of the regulation of the sector on the backdrop of implementing PIA, The Guardian learnt yesterday that the licences could be re-awarded to the original owners.

The Guardian learnt that in the case of Atala Field, it was awarded to Halkin Exploration and Production Limited, which reportedly claimed it spent some $60 million in bringing the field to production.

While The Guardian learnt that abuse of office contributed to the development on the fields, the re-award of the licences may also see the return of about eleven deputy directors who were forced to retire at DPR.

The deputy directors include, Dr. M.M. Zagi; Sani Hassan; A. Buba; E. Amadasu; A.R. Shakur; U.B. Nkanga; M. A. Alaku; A.E. Antaih; Bassey Nkanga; Isah Tafida; and J.M. Ajewole. They were sacked in March 2021.

Buhari had removed the former Director of DPR, Sarki Auwalu, from nomination to the Senate as a commission and an authorizing body was created to regulate the oil sector.

Gbenga komolafe, already confirmed by the Senate is now to head the Nigerian Upstream Regulatory Commission; under which Marginal Fields fall.