The race for 28 expired oil blocks heats up ahead of 2019 election

0
330
Reading Time: 3 minutes

The fast approaching general elections in Nigeria have ignited an uneasy calm in the oil industry, as owners and financiers of the 28 oil blocks with expired licenses have begun race to secure renewal ahead of the 2019 polls, New Telegraph has learnt.
Most of the firms, are correspondent gathered, expressed apprehension that the results of the polls might change dynamics for license renewal, hence the rush to get them renewed before the elections.

The 28 blocks, according to a document of the Department of Petroleum Resources (DPR), sighted by this newspaper, expired as at last quarter of 2016 and they have been very tough to renew
Nigeria, the document showed, had 392 blocks out of, which 208 blocks are open.

“Seventy five of the blocks are Oil Prospecting Licenses (OPLs) while 109 of the blocks are Oil Mining Lease (OMLs),” the document stated.
The DPR confirmed that some requests have been submitted to it for renewal but two of the applicants expressed misgivings over the pace of the renewal process.

“No businessman will allow delay of licenses particularly of oil blocks magnitude into a major election,” he said, adding; “pressures are being mounted to get most of the blocks renewed before the elections.”
Asked whether the rush to get licenses renewed was buoyed by belief that there could be a change of government, he said: “We are not politicians, that aspect is left for politicians, but it is a major error in business if cardinal decisions are allowed to drag near a major election.”
It would be recalled that a former Deputy Director of DPR, Sunday Adebayo Babalola, who confirmed the figure, said that 28 oil blocks had already expired as at 2016, when he left the DPR.

“Twenty four of these blocks are Oil Prospecting Licenses (OPLs) while the remaining four expired blocks are Oil Mining Leases (OMLs),” he said.
“While 47 Oil Mining Leases (OMLs) will expire in less than five years, 27 OPLs will also be due for renewal in less than five years,” he declared, adding that between “five and 10 years, 15 OMLs would have also expired while 43 of the OMLs would also expire after 10 years.”
The DPR, however, said it approved 16 new oil and gas fields development plans (FDP) in 2017 and renewed 19 expired oil leases in 2018.

It also issued 10 gas production licenses, which generated N747,614,888,823.04 revenues in the year under review, according to the latest DPR document.

The approval of the 16 new fields is projected to increase Nigeria’s oil and gas production by 560,463 barrels per day when fully commissioned. To enhance upstream investment influx and accelerate oil and gas reserves and production growth in the country, the document revealed that DPR renewed 19 expired leases in 2017.

The Department, last month, joined issues with the Senate when the latter accused it of not following due processes in renewal of oil and gas prospecting licenses in the country.

The department, the document obtained by this newspaper showed, however, initiated early lease renewal pro gramme to accelerate revenue generation for the government to fund national budget and incentivise upstream investments by ensuring security of tenure given to long gestation and payback period of oil and gas investments.

Besides, the document explained that the process is part of the Accelerated Revenue Generation Initiative of the Honourable Minister of State for Petroleum Resources and the DPR.

An upstream concession status document obtained from DPR had said about 51 Oil Prospecting Licences (OPL) and Oil Mining Lease (OML) of different oil blocs expired between 2010 and March 2017, threatening about $2 billion (N720 billion) in signature bonuses.
Another 85 OPL and OML will expire between April 2017 and 2029, according to the document. “We have so far processed the renewal of about 25 blocs, which have combined revenue stream of about $1 billion,” the document added.
Forty-seven oil block licenses were expected to expire before the end of 2019 alone.

The other license, OML, is granted to holder of 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.

Leave a Reply

%d bloggers like this: