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Knocks, Kudos Trail FG’s Revocation of Oil Licenses

-By Gideon Osaka

Diverse reactions have continued to trail the recent revocation of six oil blocks belonging to five companies, announced by the Department of Petroleum Resources, DPR, on behalf of the Federal Government.

Valuechain gathered from some industry insiders that double standards were noticed in the Federal Government’s action as it was said to have applied different and milder sanctions on other companies that committed the same offence, while some other stakeholders were of the opinion that the decision would send positive signals to others who presently own oil fields that are not producing. Ademola Henry, team leader, Facility for Oil Sector Transformation (FOSTER), said that it is within the powers of DPR to revoke licences, especially oil blocks that are not producing. “Why keep something that is depriving the country of huge revenue which we desperately need now when we can find other investors?” he asked. On the implication of DPR’s decision going forward, Henry said, “It means people that bid for licences should be those that have both financial and technical capacity, which implies DPR should make sure those that bid for these licences are well vetted. “It means we will probably get quality investment and we will have more people who actually can do the business and maybe we eliminate the card-carrying contractor who just wants to get the licences to sell.”


Moshood Abiola

Also speaking, Ayodele Oni, energy partner at Bloomfield Law Practice, said the government acted within the scope of the laws governing the petroleum sector and each breach has a corresponding penalty. According to him, “Remember also that the Minister possesses discretionary powers to revoke or withdraw oil licences.”

However, another industry source, who chose to be anonymous, told Valuechain that all the revocations may not make sense as Pan Ocean, one of the victims is still finding it a bit surprising because it has invested so much money and technology in producing oil from OML 98 which is currently producing about 3,500 barrel per day, bpd. “A substantial volume of oil and gas is being produced. So what will happen to the million-dollar investments invested by Pan Ocean in developing the block or its 40 percent working interest? Will it be given to another person?” he asked.

It was also gathered that the Moshood Abiola family is bitter that the Federal Government revoked the oil block given to their patriarch, while at the same time pretending to have healed the wound of the June 12 presidential election annulment, by declaring it a public holiday. “Are we supposed to be happy that June 12 has been made a public holiday, when the Federal Government has revoked the license of Summit Oil? Has the government shown sincerity by such action? Don’t you see that the government wants to stifle the family economically?”, a family member who wouldn’t want to be named asked. Summit Oil International, which held oil prospecting license, OPL, 206 was owned by late Moshood Abiola whose 1993 presidential election victory was annulled by the military junta of Gen. Ibrahim Babangida. OPL 206 has over the years struggled to produce any commercial quantity of crude oil despite several attempts.

Some other revoked blocks include oil mining lease, OML 110, operated by the family-owned Nigerian firm Cavendish Petroleum since 1996 but has not had an official titleholder since Cavendish’s rights to the zone expired in 2016. Cavendish Petroleum was founded by the late entrepreneur Alhaji Mai Deribe, who hailed from Borno State. He was able to pull strings under Gen. Sani Abacha, military Head of State from 1993 to 1998, to pick up oil blocks and become one of the richest businessmen in his state.

Allied Energy (now Erin Energy) acquired 40 percent working interest in OMLs 120 and 121 from Nigerian Agip Exploration, a subsidiary of Eni SpA, in 2012. Not much production activity has been done on those fields. In April 2018, New York and Johannesburg-listed Erin Energy filed for bankruptcy as it sought to restructure its debt and regain financial viability as Allied Energy Plc and Camac International Nigeria Ltd founded by renowned Nigerian-born industrialist Kase Lawal. Erin bought what it called the “economic rights” to Nigerian oil mining licences 120 and 121, which included the productive Oyo oil field owned by Lawal and his family. However, Oyo oil field turned out not to be as productive as forecast as Erin shareholders sued the CEO and certain directors of Erin over the deal.


The OML 108 (formerly OPL 74) was owned by Express Petroleum. It assigned 40 percent interest to Conoco Energy Nigeria Limited as technical advisor. Conoco relinquished its 40 percent stake in the bloc in 2004 and transferred it to Shebah Exploration and Production Company Limited same year, owned by Bryant Orjiako, Chairman Seplat Petroleum Development Company. OML 108 covers an area of 750sqkm in a water depth of 88ft (30m) in the western edge of the Niger Delta in shallow water offshore Nigeria, six miles southwest of Chevron’s Meren field, but reaches water depth of 700ft (213m) on the southern portion of OML 108.

OML 98, controlled by Pan Ocean is located in the Northern Delta Depobelt and in the northern fringe of Niger Delta Basin. It covers an area of 523 km² in Edo and Delta States. Fields within the block include the Ogharefe, Ologbo, Asaboro, Adolo, Owe, Ossiomo, Ona and Erimwindu fields. Pan Ocean commenced crude oil production at the Ogharefe field (OML 98) with an initial production of about 11,000bpd in 1976. It is the only asset belonging to a Joint Venture (JV) between NNPC which owns 60 percent working interest and Pan Ocean Oil which has 40 per cent. According to a source close to the matter, OML 98 has a more delicate and complicated relationship between the JV partners, the NNPC represented by National Petroleum Investment Management Services (NAPIMS), the investment and management arm of NNPC, and Pan Ocean Oil Corporation. The source explained that high-level negotiations held previously to resolve the issues of outstanding payment as well as related projects tied to the JV and other assets within the vicinity of OML 98 between representatives of the Federal Ministry of Petroleum Resources led by the former Minister of state for Petroleum Resources, Ibe Kachikwu, and Pan Ocean had failed to yield any positive result.

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