By Timothy Oyomare
The serenity that characterizes the processes of doing business in the oil and gas industry has been punctured over alleged seemingly lack of transparency that followed the on-going renewal of some oil blocks, leaving skepticism and doubts in its trail.
The licenses being renewed include 35 Oil Mining Leases (OML) and seven Oil Prospecting Licenses (OPL). The licenses are OML 114, which is operated by Moni Pulo Limited; OML 115, which is operated by Oriental Energy Resources Limited; OMLs 29, 24, 18 and 30 operated by Aiteo Eastern E&P Company Limited, Newcross E&P Limited, Eroton E&P Company Limited, and the Nigerian Petroleum Development Company/Shoreline Natural Resource Limited, respectively.
Others are 17 OMLs operated by Shell Petroleum Development Company; OMLs 4, 38 and 41 operated by Seplat Petroleum Development Company Plc; OMLs 40, 42, 26, 34 64, 65 and 66 operated by NPDC, as well as OMLs 116 and 117, operated by Agip Energy and Natural Resources and Amni International Petroleum Limited.
Industry operators have cried foul, expressing lack of transparency in the whole exercise. According to The Executive Director of Institute for Oil, Gas, Energy, Environment and Suitability (OGEES), Prof. Damilola Olawuyi, though legal requirements were clear on the renewal, there was the compelling need for due process and transparency in the renewal process.
“The chief concern is the need for due process and transparency in the renewal process, most especially providing accessible information and data as to whether and how oil companies that have applied for renewal have met the prescribed legal requirements. “For example, how many oil companies have remitted royalties as at when due, what is their production and compliance track record, and to what extent can the Department of Petroleum Resources grant discounts, rebates and waivers in case of record of non-compliance by an applicant company.”
“In order to provide clear guidelines and answers to these recurring questions, it is essential to update and infuse some obsolete provisions of the law with greater transparency and accountability safeguards. International best practices on transparency and accountability would have to be clearly understood and implemented in the oil and gas industry,” Olawuyi said.
Others like the Chairman/Chief Executive Officer, International Energy Services Limited; Dr. Diran Fawibe, President, Nigerian Association for Energy Economics (NAEE), Prof. Wunmi Iledare and Principal Partner, Nextier, Patrick Okigbo III, admitted that the renewal was essential for the growth of the industry, but the Petroleum Industry Bill (PIB) should have been passed before the renewal.
Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu has attributed the development to an early renewal policy that was instituted by the current administration, disclosing that over $2b had already been generated from the renewal to enable the country finance its budget.
Following this development, the House of Representatives has given hint of likely probe of the oil licence renewal, which Ibe Kachikwu said was a welcome idea, as he was available to respond to questions should the lawmakers require clarification on the issue.
The Petroleum Act of 1969, as well as the Petroleum (Drilling & Production) Regulation of 1969 (as amended in 2001) authorise the Minister of Petroleum Resources to renew oil licenses once statutory payments in terms of applicable royalty, concession rentals and fees have been paid.