Nigeria’s idle oil blocks - SUN NEWS

APRIL 22, 2019

The recent report that 211 of the nation’s 390 oil blocks are yet to be allocated by the Federal Government is not tidy considering the fact that our economy depends solely on crude oil proceeds. Data from the Department of Petroleum Resources (DPR) showed that 179 oil blocks were allocated as at December 2017. They included 111 oil mining leases and 68 oil prospecting licences.

Unfortunately, the management of the oil sector has not been very transparent and this has been criticised by many stakeholders in the sector. It is also sad that the oil sector has been riddled with  alleged monumental corruption. The sector has been mired in sharp practices, deliberate non-disclosures and underhand deals. The allocation of oil licences in particular has been problematic as it has been characterised by fraudulent practices, cronyism, and driven mostly by the greed of the men of power. This has led to lack of trust and transparency in the sector. It has also slowed down investments in the sector.

At the inception of the present administration in 2015, a number of the oil licences had become due for allocation, but President Muhammadu Buhari opted to shelve the process. This approach was not unexpected given the president’s character of biding his time before acting on any matter presented to him. President Buhari is also known to hold the strong view that things need to be done differently in the oil industry this time around to reduce some of the sharp practices and excessive individual patronage, especially as it concerns the allocation of oil licences.

Instead of most of the oil licenses going to highly placed individuals, political bigwigs and their collaborators, the new thinking is that most of the oil wells should go to international oil companies, state governments and even host communities where the acreages are located for more inclusivity and transparency in the sector. There is also the question of capacity to handle both the prospecting and mining ends of the business as oil sector is known to be highly capital intensive.

What a number of our big men and influential individuals who got the allocation in the past did was to sell their allocation papers at huge profits without any investments whatsoever.

For more productivity in the sector, this practice must be done away with. The lack of transparency and accountability in the oil sector is perhaps legendary and has been of much concern to stakeholders both at home and abroad over the years.

However, we believe that these abiding and genuine concerns are not enough to halt the allocation of the oil blocks. Without doubt, huge investments are needed in the oil sector to help generate the resources needed for the diversification of the economy. 

For this to be achieved, President Buhari as the approving authority for the allocation of oil wells should not shelve the responsibility.  In fact, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has recently indicated that now that the elections are over, the president may now be ready to get on with the job.  We urge the concerned authorities therefore to do the needful and very quickly too. To have over 211, which represent about two-thirds of our oil acreages idle and unallocated is grossly inimical to our national interest.

The Medium Term Economic Framework (MTEF) for 2019-2021 just passed by the National Assembly put the daily oil production benchmark at 220million barrels per day. How does the country ever hope to achieve it without the needed new investments in the sector?

We laud the modest gains achieved from a new commitment to transparency in the sector as witnessed in the  Nigeria Extrative  Industrial Transparency  Initiative (NEITI) commendation letter to the Nigerian National Petroleum Corporation (NNPC) and the ongoing reforms being undertaken by the National Assembly through the PIB legislation.

The reforms are necessary to bring our local oil industry at par with best international practices and subsequently attract new capital investments in the sector to optimise our oil and gas potentials.


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