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Oil production: More leases to be renewed

By Clara Nwachukwu
ABUJA — The Federal Government has said it will renew more oil licences held by the oil majors, particularly those under joint venture, JV, operations with the Nigerian National Petroleum Corporation, NNPC, in the months ahead.

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, gave the hint, yesterday, in Abuja when she signed the renewal leases for oil mining leases, OMLs 67, 68 and 70, under the NNPC/Mobil Producing Nigeria JV for a period of 20 years.

The blocks had earlier entered into controversy between the oil majors and the minister, who cancelled the renewal earlier approved by her predecessor, Mr. Odein Ajumogobia, in 2009, on the grounds that the American oil firm did not pay the requisite renewal fees for them.

Madueke said government was committed to the growth and development of the oil and gas industry, adding that the leases renewal marked another milestone in the country’s hydrocarbon industry.

But speaking later at the ongoing NOG 2012 International Conference and Exhibition, the JV partners, represented by their chief executives, tasked government on clarity of policies.

Among the JV partners present were the Country Chairman, Shell Companies in Nigeria, Mr. Mutiu Sumonu; his ExxonMobil counterpart, Mr. Mark Ward, Chevron Nigeria’s Andrew Fawthorpe; Total E&P’s Guy Maurice; and Nigeria Agip Oil’s Ciro Anthonio Pagano, Nigeria’s top biggest producers respectively.

Speaking on: “What Next for Nigeria’s Exploration & Production?” the oil majors chief executives, noted that investment could only thrive in a stable environment, adding that the indecision over the Petroleum Industry Bill, PIB, has put a cap on further investments on new oil projects.

ExxonMobil’s Ward, noted: “Oil and gas industry projects span decades, require huge investments, and utilise cutting edge technologies that evolve throughout project cycles. Long term planning is, therefore, critical – planning that looks beyond the current business cycles and relies on stable and globally competitive fiscal frameworks, clear and transparent regulatory process, efficient bureaucracy and confidence in the ongoing sanctity of the agreements.”

Fate of licence renewals

Against this backdrop, there were concerns about the fate of the licence renewals in the face of a new PIB, which might invalidate the agreements.

But reassuring the oil majors, the NNPC Group Managing Director, Mr. Austen Oniwon, said there was no cause for alarm, as renewals would be treated on a case by case basis, in line with pre-existing clauses.

He said: “And when the PIB comes, if there is any need for adjustments, it will be done based on individual basis. But we cannot stop continuity of business, waiting for the law to be passed because the PIB is not going to invalidate the licences that have just been issued. We are going to renew additional licences in the coming weeks. Today, we have just done one with ExxonMobil. So, there is not going to be any conflict between the PIB and the licences.”

Commenting, Shell’s Sunmonu, who expressed the hope that his company’s leases would be the next in line for such renewals, called on government to expedite the renewal processes, as this would enable the oil companies to plan better.

He said: “The earlier these licences are renewed, the better for us, in terms of accommodating them in the business plan.”

We have always planned on the basis that it is just a question of time before the licenses are renewed,” he said.

The Minister had earlier explained that the renewal of the leases was done in line with Paragraph 10 and 13 of the first schedule of the Petroleum Act of 1969, Cap V 10, and promised that all other pending renewals would be expeditiously handled.



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