…As FG delays decision on Benin embayment

By Ediri Ejoh

There are indications that the Federal Government’s unwillingness to step up its game and free up the Benin embayment to capable indigenous oil and gas firms, may have incurred a huge loss of investment running into billions of dollars.

The Benin embayment is part of an extensive basin on the Nigerian coastal line. Also referred to as the Dahomey embayment, it is rich in hydrocarbon and was left fallow for several decades because of lack of investment.

According to Vanguard investigation, the embayment is home to the Aje Field which is reported to have close to 200 million barrels of oil and multi-TCF gas reserves as well as the Ogo Field, among others.

The Federal Government’s policy had opened the embayment to investment, leading to the activities of Crownwell Petroleum, Panoro Energy and others operating in the area.


However, in recent times, the government’s foot-dragging on approvals for companies has meant that less investment is being made on wells which have the capacity to significantly boost Nigeria’s Gross Domestic Product (GDP) and improve the lives of Nigerians.



The Zabazaba Deepwater Oilfield in Oil Prospecting Lease (OPL) 245 is a familiar example. To this end, the $13.5 billion deep water oilfield, with proven reserves of 560 million barrels and production volume of about 150,000 barrels of oil per day has not yet been finalized.

The delay, Vanguard gathered, prompted a group called The Niger Delta Indigenous Movement for Radical Change Group (NDMIRC) to write President Muhammadu Buhari, in 2017, urging him to give approval which will facilitate the final investment decision (FID) on the project.

NDMIRC stated: “the Zabazaba project is capable of generating over eight million jobs for Nigerians. This is a ray of hope for those who have lost their jobs and other Nigerians seeking for employment. Unfortunately, the government is still delaying the project.”

Vanguard findings showed that Nigeria has not been able in the past 11 years, to hold oil licensing round. However, despite several promises by the current government, the country is yet to overcome the regulatory and bureaucratic bottlenecks which hinder the licensing round.

To this end, Nigeria continues to lose billions of dollars in potential investment as investors direct their attention to more stable oil bearing-countries, including Angola and Ghana.

The development has affected some operators, especially Lekoil.  The company had farmed into Afren’s stake of OPL 310, thereby acquiring a 30 percent economic interest, translating to 17.14 percent equity participation.

But recent moves by Lekoil to get approval from the government to increase its stake so as to enable it make further investments in the block has been stalled by government’s slow approval process.

Investigation showed that in 2015, when Afren ran into financial trouble, Lekoil bought the Afren subsidiary that held the latter’s 40 percent remaining economic interest for $13 million, thereby adding another 22.86 percent in equity. The deal boosted Lekoil’s economic interest to 70 percent and its equity interest to 40 percent.

Initial investment

Already, Vanguard gathered that the company has spent more than $120 million on OPL 310 but is unable to continue development without ministerial consent to the second equity transfer.

In statement made available to Vanguard, Chief Executive Officer, Lekoil, Mr. Lekan Akinyanmi, stated: “We put $50 million into drilling one exploration well and side-track, resulting in the Ogo oil discovery and gross recoverable reserve of 774 million barrels of oil equivalent (on a proven and portable basis).”

Also, as an original indigenous operator, awarded acreage under the 1993 marginal fields round, Optimum Petroleum was constrained from farming down more than 40 percent to Afren but the deal it signed allowed Afren to sell on without Optimum’s permission, subject to ministerial consent, contends Akinyanmi.

Investigation further showed that Lekoil sought consent in January 2016, well ahead of OPL 310 license expiry date and in the wake of continuous government inaction applied to the Federal High Court in March 2018 for a declaration that consent is deemed to have been granted to it to increase its stakes.


At present, Lekoil is claiming forced majeure, under the remits of the law which provides for an extension if “causes beyond the control of the license” result in delay, and hopes to claw back at least three years.

The Minister of State for Petroleum Resources, Dr. Emmanuel Kachikwu, announced Nigeria’s ambition to attract over $40 billion new investment targeted at increasing oil production to 2.5 million barrels per day in 2019 and 3 million b/d in the next five years.

But analysts who spoke with Vanguard noted that these and other projections will not likely be achieved, except the government does the needful, and speedily too.




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