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Renewal of 35 major oil leases is litmus test for next president

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Over seventy two million Nigerians who collected their PVCs will not only be determining the leader of Africa largest oil producing country they will also be determining the fate of  35 major oil blocks expiring this year.

According to information available to BusinessDay, there are about 35 major Oil Mining Licenses (OMLs) that will expire at different period this year with most of them falling due for renewal in June.

An OML is a major type of license in Nigeria granted to a holder of Oil Prospecting License (OPL) to commence production after discovery of crude oil in commercial quantity of at least 10,000 barrels per day. The duration of the license is for 10 years with option of renewal for another 10 years.

OML 114, operated by Moni Pulo Limited, was due for renewal last month, while OML 115, whose operator is Oriental Energy Resources Limited, will expire in May.

OMLs 29, 24, 18 and 30, operated by Aiteo Eastern E&P Company Limited, Newcross E&P Limited, Eroton E&P Company Limited and Nigerian Petroleum Development Company/Shoreline Natural Resource Limited, respectively, will expire in June.

Also expiring in June are seventeen OMLs operated by Shell Petroleum Development Company as well as OMLs 4, 38 and 41, being operated by Seplat Petroleum Development Company Plc.

NPDC’s OMLs 40, 42, 26 and 34 will expire in June, while its OMLs 64, 65 and 66 will fall due for renewal in September.

OMLs 116 and 117, operated by Agip Energy and Natural Resources and Amni International Petroleum Limited respectively, will expire in August.

“Whoever emerge winner will either maintain status quo or review the process of renewal or perhaps hands off totally and allow the Petroleum Industry Bill (PIB) handle the process which will be good for transparency,” Luqman Agboola an energy analyst at Sofidam Capital said.

On many occasions, concerned stakeholders in oil and gas industry have expressed worries about the lack of transparency and accountability concerning oil contracts

“Our review of 23 upstream and downstream contracts in Nigeria, including 10 model contracts, shows that contracts in Nigeria contain several terms for which a strong public interest case can be made for disclosure,” said Nigerian Extractive Industries Transparency Initiative (NEITI)  — a body that shoulders the task of improving transparency and accountability in the management of revenues from natural resources.

Four years ago, Nigeria’s oil and gas sector hoped for a quick pivot reforms cheered by the news President Muhammadu Buhari emergency who doubled as country’s Minister of Petroleum.

Nigerians had very high hopes that the sector will improve with his election but four years after, there seems to be little or no relative difference as oil sector contracted by 1.62 percent year-on-year in the fourth quarter of 2018, a worrying performance for an economy that continues to rely heavily on the oil sector.

“Over the years, the sector has been challenged by poor governance, inadequate management of revenue streams, disjointed fiscal and regulatory provisions and gross inefficiencies in managing the upstream and downstream petroleum assets,” Agboola said to BusinessDay.

Even though the Petroleum Act of 1969, as well as the Petroleum (Drilling & Production) Regulation of 1969 (as amended in 2001) authorized the Minister of Petroleum Resources to renew oil licenses once statutory payments in terms of applicable royalty, concession rentals and fees are paid, stakeholders insist that renewing the licenses without passing the Petroleum Industry Bill (PIB) remained a major setback for the country.

 

DIPO OLADEHINDE

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