The Federal Government has revoked six oil block licences due to “legacy debts” owed the federation. The Department of Petroleum Resources (DPR), Nigeria’s petroleum industry regulator, in a public notice, yesterday, said the move was “in furtherance of the presidential directive on recovery of legacy debts owed the federation in line with the Petroleum Act Cap.P10 LFN 2004”.
The notice said oil mining lease (OML) 98 was revoked from Pan Ocean Oil Corporation, OML 120 and 121 from Allied Energy Resources Nigeria Limited, OML 108 from Express Petroleum & Gas Company Limited and OML 110 from Cavendish Petroleum Nigeria Limited. The notice also said oil prospecting licence (OPL) 206 was revoked from Summit Oil International.
The notice puts to rest media reports earlier in the year hinting that the government had revoked some oil licenses. Details of the size or value of the blocks were not immediately available but a DPR report of the industry in 2017 obtained by Daily Trust showed that Pan Ocean had been in a Joint Venture (JV) with the Nigeria National Petroleum Company (NNPC) in respect of OML 98. As a JV partner, the NNPC had 60 percent working interest while Pan Ocean had 40 percent.
OML 98 is located in the Northern Delta belt, and covers an area of 523 km² in Edo and Delta states. Fields within the block include the Ogharefe, Ologbo, Asaboro, Adolo, Owe, Ossiomo, Ona and Erimwindu fields. The DPR document showed expiration date of the OML 98 lease was July 7, 2018. OML 120, a producing block which covers about 910 km² in the Niger Delta and granted to Allied Energy Resources Nigeria Limited in 2001, was due to expire in 2021. OML 121, also held by the company although not producing, was to expire in 2021. OML 108, covering about 759 km² located in the Niger Delta continental shelf, was granted to Express Petroleum & Gas Company Limited in 1995 and was due for renewal in 2015.
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According to the DPR report, the renewal process was ongoing before the recent revocation. OML 110 covering 966 km² located in the Niger Delta continental shelf was given to Cavendish Petroleum Nigeria Limited in 1996. The DPR report said application had been made for the lease renewal. The revocation of the six licences comes as the Federal Government takes a more aggressive approach to collecting taxes and royalties that the country says it is owed.
Oil industry sources say Nigeria has also been increasingly vocal about rescinding licences that are not being actively developed. Daily Trust findings showed that Pan Ocean, Allied Energy and Express Petroleum were among oil and gas companies indicted by NEITI in its 2016 Oil and Gas Audit for failing to make payments to the Nigerian government in 2016. The transparency watchdog subsequently called on the DPR to investigate the companies and ensure the funds are recovered as appropriate.
According to the NEITI report, “Pan Ocean did not make any financial payments in 2016, despite being in JV arrangement with the federation (NNPC). NEITI further disclosed that Pan Ocean owed NNPC an outstanding debt of $135.8 million. “There is an outstanding debt of $135.793 million due from Pan Ocean to NNPC. Recovery of only the principal debt put at $135,793 million without consideration of interest, results to a loss in the time value of money,” NEITI said. The companies were not immediately available for comment.
The Director of DPR, Mr. Modecai Ladan, when contacted said spokesperson for the agency would make details of the legacy debt known. An Abuja spokesman for DPR, Bulama Saidu, promised to make details available but did not as at press time.