In June 2020, Nigeria’s government, through the Department of Petroleum Resources (DPR), launched its first marginal fields licensing round since 2003. A total of 57 marginal fields, spread across onshore, swamp and shallow-water were put forward in the 2020 bid round.
The bid round was heavily subscribed. It started with over 500 applications and closed with about 1000 applications, each paying about $115,000 to the Nigerian government’s treasury in the process. The bid round exercise was concluded on September 15, 2020, and the DPR sent the results to Timipre Sylva, minister of state for petroleum, who may have delivered it to President Muhammadu Buhari, Nigeria’s defacto minister of petroleum.
But while DPR waits on President Buhari’s nod to announce the bid result, roadblocks persist.
The bid round happened at a period of uncertainty within the oil and gas industry resulting from the fluctuation in oil prices and the reduction in global consumption due to the global COVID-19 pandemic.
But locally, a number of community leaders in the oil-bearing Niger Delta region in a lawsuit filed at the Federal High Court (FHC) in Yenagoa, capital of Bayelsa State, want the process to be truncated. The suit is a culmination of their worries for the damages irresponsible oil mining have done on their lives and environment over the years, and now want this addressed before new licences could be issued in Nigeria’s ongoing marginal oil fields bid round.
Beyond the lawsuit, the community leaders placed a series of ‘Caveat Emptor’ advertorial in national newspapers (including BusinessDay) warning prospecting companies and the general public on the dangers of applying or obtaining any licence for the marginal fields in question.
The community leaders led by Brown Agu from Opu Agu chieftaincy house of Ekemburu Obonoma in the Akuku-toru area of Rivers State, sought to stop the DPR from going ahead with its plan to select and award oil blocs to new operators in the region.
According to them, this should only happen when a comprehensive baseline environmental evaluation of oil fields allocated to operators from 1956 is conducted by independent assessors and published to determine how well they have observance standard environmental practices in oil production.
They also noted that the move was aimed at protecting the livelihoods and environment of their communities, and inferred that the absence of corporate ethical and governance practices in the operations of oil companies in the region had ruined their environment.
Similarly, they contended that handing out fresh licences without fixing existing environmental issues will worsen their condition. Thus, they want their environment factored into the new oil licensing round.
Oil spills still persist
Nigeria’s oil-rich Niger Delta is still stewed in huge environmental ruin. Also, there is a clear-cut evidence suggesting that the effects of oil spills on neonatal mortality persist for several years after the occurrence of an oil spill; indicating therefore that for years, families in the Delta live with the health impacts of oil spill – mostly death of their babies.
Oil has been severally described as both a blessing and curse to Nigeria, which is Africa’s largest producer. But failing to adopt practical governance of her oil industry means that Nigeria gets to record frequent oil spills from pipeline vandalism, theft, and poor maintenance.
Historically, oil spillage in Nigeria is relatively old; from July 1979 where Adati Kadafa, a researcher from the Universiti Putra Malaysia, recorded that a total of 570,000 barrels of oil were spilled into the Forcados estuary from the Forcados tank-six terminal incidence in Delta State (then Bendel State), to the January 1980 Funiwa well-five blew out at the Funiwa Oil Field spilling an estimated 421,000 barrels of oil into the ocean, data show that an estimated 13 million barrels of oil have been spilled into the ecosystem of the Niger Delta over the past 50 years.
Similarly, Kadafa recorded that in May of 1980, another 30,000 barrels of oil from the Ebocha-Brass pipeline flooded the lake and swamp forest, just as 5,000 barrels were spilled in Oshika village in Rivers State in August 1983. Another one, the Ogada-Brass pipeline spill was recorded near Etiama Nembe in February 1995, with approximately 24,000 barrels of oil.
Regarded as the premier international oil company in Nigeria, Shell Petroleum Development Company (SPDC) is recorded by Kadafa to have reported an average of 221 spills per year in its operational area since 1989.
While most of the spills recorded occur on land, swamp and offshore environment, the Nigerian National Petroleum Corporation (NNPC) equally estimated that between 1976 and 1996, approximately 2,300 cubic meters of oil had been spilled in 300 separate incidences annually.
An estimated 836 acres of mangrove forest six miles off the shore of the region has been destroyed. Between 2018 and November 2020, data from the NOSDRA’s spill monitor indicated that 1,043 cases of oil leakage were recorded by oil companies in Nigeria with the most number – 384 – recorded by Shell.
Oil firms founded by indigenous operators – Aiteo, Eroton, First Hydrocarbon, ND Western, NNPC’s subsidiaries, Nigerian Petroleum Development Company (NPDC) and Pipeline and Product Marketing Company (PPMC) – were equally found in the NOSDRA platform to have recorded significant leakages in their operations.
Taking their destiny in their hands
Worried thus by the failures of governance to fix the ruin on their environment and life, the community leaders consider the lawsuit initiated as a fresh means to save their environment and livelihoods.
With the lawsuit, they hope to stop the Nigerian government from ceding out new oil blocs to operators in an ongoing marginal field bids round until their environmental challenges are addressed.
57 marginal fields in the region are to be given out by the DPR, which is statutorily responsible for the process. Documents detailing its plan for the bid rounds have also been published.
In the documents, the DPR stated its expectations that successful bidders for the blocs would be judged on their technical and financial capacities beyond being registered in Nigeria with 100 percent indigenous shareholding.
It also specified its expectation that participating companies in the process should be active and technically competent in the country’s exploration and production (E&P) sector.
Other requests the DPR made in the document included evidence of bidders’ relationship with competent technical partners with experience in E&P operations, in addition to financial competence.
But the department did not ask for preferred bidders to show their capacities or commitment to operate the oil blocs with minimal or no environmental abuses such as oil spillages.
“Field development economics for this marginal field bid round is based on the Marginal Field Operations (Fiscal Regime) Regulations, 2005 and the Petroleum Profits Tax Act (PPTA), 1958, as amended,” the DPR said.
Further on conditions that could result to licence withdrawals, the department indicated that the inability of awardees to progress with work on their blocs would result to licence withdrawal but not environmental ruins from such operations.
On the back of this, the community leaders explained that without “a comprehensive baseline environmental evaluation of oil fields allocated to operators from 1956,” conducted by independent assessors, they would legally stop the government from awarding oil blocs to new operators in their communities.
No going back
Shortly after a scheduled court sitting on their suit in Yenagoa that could not hold on December 7, 2020, Agu in a statement stated the commitment of the communities to their request.
“We were in court as earlier scheduled for the matter, which was for hearing of the motion for injunction. We have, however, just been advised that court would not sit today.
“No reason was given why the court did not sit. In any event, as Ijaw people who have suffered as a result of the rape of our resources and degradation of our environment, we are ready to pursue the case to a logical conclusion.
“This is to draw attention to the fact that we will be taking every legal step to seek justice for ourselves and our people including generations yet unborn. Enough of the violation of our fundamental human rights and back door practices in the oil sector.
“Everyone including any Ijaw sons, daughters and officials doing things against the interest of Ijaw nation and people should take note that we are discerning enough to know their antics and they will have their day in the law courts and the courts of public opinion,” Agu said.
Government still ponders another licensing round for 2021
The government is also mulling another licensing for 2021 but this time around in deep and ultra-deep waters of the Niger Delta, Mele Kyari, group managing director of the NNPC, stated recently, saying it is in line with government’s aspiration to ramp up the country’s crude oil production to about 3 million barrels per day and 40 million barrels crude oil reserves.
But how far the government will go with this latest move for new licensing rounds in 2021 remains to be seen, especially as the roadblocks that may have truncated the marginal field bid round of 2020 are far from being settled.
