Posted by By Mike Oduniyi in Lagos and Chuks Okocha in Port Harcourt on
Multinational oil companies mainly from Europe and North America are protesting the award of two lucrative deep offshore oil blocks to Korean investors, at the 2005 Bid Round concluded last weekend.
Multinational oil companies mainly from Europe and North America are protesting the award of two lucrative deep offshore oil blocks to Korean investors, at the 2005 Bid Round concluded last weekend.
The companies represented by ExxonMobil, Shell, Chevron, Total, ConocoPhillips and Devon, say that the award of Oil Prospecting Licenses (OPLs) 321 and 323 to the Korea National Oil Corporation (KNOC), negated the principle of transparency that the Nigerian government promised when the Bid Round was launched.
KNOC, representing a consortium of four Korean firms including KEPCO and Daewoo Shipbuilding and Marine Engineering Company, had won the two blocks when it agreed to match the total $485 million (N65 billion) signature bonuses originally offered by Indian investors, ONGC Videsh, in winning the blocks.
However, while KNOC wrestled the blocks from the Indians under the right of first refusal granted it by the Federal Government, industry officials told THISDAY yesterday that the blocks in contention were not the acreage the government originally placed the preferential rights upon, for the Koreans in return for the latters' agreement to invest in Nigeria's downstream petroleum sector.
In a letter from the Department of Petroleum Resources (DPR) to all pre-qualified operators Monday last week, the Federal Government had informed that KNOC "shall be given right of first refusal for two deepwater blocks 313 and 332."
OPLs 321 and 323 on the other hand, were among the 12 deepwater blocks that were originally put on offer. Other acreage in the region were OPLs 257 (won by Conoil); 325 won by the Oando/Oph-ir/Ashbert Consortium; 315 won by Brazil's Petrobras, 252 which went to Emergulf/Derock; 258, 319, 314, 327, 328, and 251.
According to industry officials, it was in line with the protest against what was perceived as the preferential treatment accorded the Korean investors that made the oil majors notably Shell, Anadarko, ConocoPhillips, Devon and ExxonMobil to stay away from the bidding conference held between Friday and Saturday last week, despite picking up more than one bid packages.
Shell, through Shell Nigeria Exploration and Production Company (SNEPCO) for instance, bought two bid packages; Anadarko, three packages; ExxonMobil, five packages; and Devon also three packages.
Sources said the oil majors' target had been OPLs 321 and 323, which according to officials, showed great prospects with reserves said to be up to 2.0 billion barrels of crude oil.
"At least 19 oil companies bought the data on 323 and 321 to perfect their bids, and it is on record that KNOC didn't," disclosed a source. The source said further that the sudden transfer of the right of first refusal on the blocks "cut-short the interest of the oil majors in the exercise."
"The oil majors have demonstrated their protest against this by staying away at the bid conference. The next step is to officially write to President Obasanjo," said another official.
DPR officials in-charge of the 2005 Bid Round who were contacted on the points raised by the oil majors, were also not able to explained the transfer of the right of first refusal from OPLs 313 and 332 to OPLs 321 and 323.
A senior official of the department contacted said that the Federal Government might have considered other factors in finally taking the decision for the switch.
The officials, however, insisted that despite the inclusion of the rights, the process remained transparent and open. "In the first place, the oil majors that participated quoted $10 million for a deep offshore block that the guidelines set at a minimum signature bonus of $50 million. That means they were already disqualified," said a senior DPR official.
"Even at that the Koreans have agreed to match the winning bids within the next 90 days or lose the blocks," the official added.
KNOC won the right of first refusal first, on the 14 blocks reserved for strategic downstream investors and later on the two deepwater blocks, after it signed an agreement with the Nigerian government to invest up to $6 billion in the construction of a 2,000-mega watts independent power plant, a rail transport system and a gas pipeline.
KNOC will, however, hold 65 percent equity in the two blocks while India's ONGC Videsh, which originally won the bids, will have 25 percent of the blocks, and a local content vehicle (LCV) Nigerian firms holds the remaining 10 percent.
Meanwhile, the Rivers State Government said yesterday it was among the successful bidders for the award of oil blocks in the continental shelf.
The government also said that it is the only state government that was successful in the bidding of the oil block with its company, Rivgas.
The State Commissioner for Information, Mr. Magnus Abe, said in Port Harcourt that the state in partnership with a company named ‘ Clean Waters Refinery and Rivgas' bidded for and was successful in the award of oil blocks.
He also said that the state is taking full advantage of the economic reform policies of the Federal Government, adding that by winning the oil block in one of the continental shelf in one of the states, which he refused to disclose ' we are not only participating, we are also taking resource control to another level."
Abe described the bidding process as competitive and transparent. He gave kudos to the former State Commissioner for Energy, Engr. Ndubuisi Nwankwo, for his efforts in seeing that the state was successful in the bidding exercise.
He added that details would be made known at a later date when the state meets with its technical partner in the Clean Waters Refinery.
The Rivers spokesman said that the state government was awarded license to build a refinery in the state, announcing that very soon the state refinery will go into production
Though he said that the state was unsuccessful in bidding with an Indonesian company for equity stake in the Nigerian Fertilizer Company (NAFCON) ' we will still have an interest in the company. We will make sure that our interest is well protected, all this is in line with the Federal Government economic reform policies."
He said that the Independent Power Project (IPP) embarked upon by the State Government is nearly 90 percent completed and would be commissioned in October this year.
The power stations, he said, are located in Omuku, Ogoni and the Eleme area of the state.