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FG revokes 14 oil blocks

Posted by Clara Nwachukwu on 2005/06/14 | Views: 337 |

FG revokes 14 oil blocks


The Federal Government has revoked the oil prospecting licences for 14 oil blocks, located on land and shallow waters, which were left undeveloped by the operators for more than 10 years.

The Federal Government has revoked the oil prospecting licences for 14 oil blocks, located on land and shallow waters, which were left undeveloped by the operators for more than 10 years.

The oil blocks form part of the 61 blocks to be put up for sale during the 2005 bid round, expected to take off from August this year, and are already tied to specific downstream projects to boost products availability in the country.

The oil blocks include OPLs 274, 280, 276, 275, 290, 278 and 283. Others are OPLs 281, 287, 289, 288, 282, 277 and 732 all of which comprise about 74 proven oil wells.

The Director, Department of Petroleum Resources, Mr. Tony Chukwueke, who disclosed this at his first press conference since he assumed office on June 6, said that the oil blocks belonged to the major oil companies including Shell Petroleum Development Company, Chevron Nigeria Limited, and Total.

“We reached an agreement with the joint venture partners operating the oil blocks and they voluntarily released them, and we want to use these oil blocks to drive government’s policy to make fuel available for downstream operations,” Chukwueke said.

He explained that this was the reason why the oil blocks were earmarked for specific downstream projects, and would be part of the open bidding during the licensing round, stating, “When oil is produced in these blocks, we would use them to kick-start these downstream projects.”

Specifically, two of the oil blocks, OPLs 274 and 280 were reserved for investors interested in the Kaduna Petrochemical Refining Company.

He said that the move was meant to facilitate the speedy privatisation of the refineries, which for so long had been shunned by the oil majors in spite of Federal Government’s overtures to them.

He said, “All the refineries were put up for sale but none of the majors have agreed to become a core investor. It is true that we have proposals from Shell, but these have not gone as far as expected, as nothing has been concluded.

“As a result of the dilemma, we are waiting for the majors to respond appropriately, the retrieved oil blocks were tied to these downstream projects.”

Consequently, he said, the China National Petroleum Company, which has expressed interest in the refinery, had been given the right of first refusal for the two oil blocks earmarked for the refinery during the bid round.

The remaining 12 blocks were earmarked for liquefied natural gas projects only and for independent power projects only, or a combination of the two.

Those for LNGs are OPLs 276, 283, 287 and 282. Only OPL 277 was tied to IPPs, while OPLs 275, 290, 278, 281, 289, and 288 are for combinations of LNGs and IPPs.

The DPR boss also disclosed that some investors in the downstream sub-sector had already approached the Presidency and the Ministry of Petroleum Resources for some concessions that would enable them participate effectively during the licensing rounds.

He said that although government was willing to grant some concessions through is local content vehicle by ensuring that 10 per cent stakes were reserved for indigenous companies, who are to pay $10,000 subscriptions fee.

He stressed, “Unlike what prevailed in the past, this 10 per cent is not transferable. The investors can team up and share the risks for the specific blocks, but they cannot transfer them to foreigners in the name of technical partners.

“This is a strategic shift from the past, where Nigerians sell their equities in search of technical partners, which defeat the aspirations of Nigerians in oil and gas operations.”

In the face of criticism of the subscriptions fee, Chuwkwueke defended that is was a deliberate move to forestall sell-offs.

He added, “If you are a serious investor and you cannot pay the subscription fee, then how can you pay the rest including signature bonus, and operations fee. So the fees are to put genuine LCVs, and if we reduce them, it means we would be inviting investors who only want to buy and sell rather than invest.”

With regards to the majors aversion to the LCVs tied to the licensing round, he stated that government was working out a standard joint operations agreement, defining what oil activities are domiciled for LCVs and we would have a review to access level of performance.

The Punch, Wednesday, June 15, 2005

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Fay(Katy, Texas, US)says...

Actually translates to bravehearted.