By VICTOR NWACHUKWU

When some representatives of five oil communities in Delta State travelled all the way to the National Assembly complex in Abuja late last month, they somehow succeeded in giving life to the over flogged issue of the transfer of Shell shares in some onshore blocks.

The issue of operatorship of the oil blocks in which Shell relinquished its stake is perhaps the most explained issue in the Nigerian oil industry in recent times. Yet, anytime it comes up, it is packaged to raise storm to obfuscate true motives.

For the Nigerian Petroleum Development Company Limited (NPDC), the divestment of Shell’s interest in some onshore oil fields was an opportunity for further growth: the operatorship of those fields had to change.

Shell is the operator of the Nigerian National Petroleum Corporation (55per cent); Shell (30per cent); Total Exploration Nigeria Limited (10per cent); and Nigeria Agip Oil Company (5per cent) joint venture, otherwise called The Shell Petroleum Development Company of Nigeria.

First, Shell sold its stake in Oil Mining Leases (OMLs) 4, 38 and 41 last year to the Seplat Consortium.

Similar divestment plans, freed the operatorship of OMLs 30, 34, 40 and 42.

Shell, in conjunction with its multinational oil partners, tendered their 45 percent stake in the four oil fields for sale to interested oil companies under a strategy to downsize its onshore operations in the Niger Delta.

But in this case, the Nigerian National Petroleum Corporation (NNPC) decided to exercise its right to operate the blocks. Clause 2.6.2 of the JOA states that in the event of assignment, one of the non-operators in the JV shall become the successor operator, which in this case, is NNPC. The corporation automatically transferred the fields’ operatorship to its production subsidiary – a growth opportunity.

Following insinuations, partly fuelled by some people who wished for the operatorship of the fields, the Honourable Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke had repeatedly explained the issues, at length, in various interviews.
Eager to ensure that NPDC grows quickly to join the ranks of major national oil companies, the Ministry and the NNPC had developed a strategic growth plan for the subsidiary.

The Minister said, “according to the growth plan, if we followed it, in terms of moving assets or assigning certain assets to NPDC over the next four years or so, by 2015, NPDC should move from a company that was producing approximately 40,000 barrels when we came in last year per day to one that will be producing about 265,000 barrels per day. At which point they would be able to rub shoulders with the Petrobrases and Petronases of this world and that is critical for the country”.

And there was a precedence to follow: “the first issue I had was with OML 119, for which NPDC has a service management contract with Agip and a Nigerian indigenous partner. But they now wanted to actually take the block from NPDC, compelling us to go through all kind of issues, and finally, with the support of Mr. President (Goodluck Jonathan), I was able to resolve the issues pertaining to OML 119 for NPDC. And because of it, NPDC has gone from 40,000 barrels per day to a company that is producing almost 100,000 barrels a day. So we looked at others blocks and of course the Seplat-Shell issue had already come up. So, we quickly looked at OMLs 4, 38 and 41, and again there was the choice for us to assign (NNPC’s stake) to NPDC.”

She continued with the case of the other blocks: “It is for this reason that some of these other blocks – OMLs 30, 42, 40 and 34 – that Shell and its partners are selling were included in the NPDC growth plan just for the main reason of growing NPDC because we consider them national security and economic risks….”

The minister gave additional reasons for transferring NNPC’s stake in the joint venture to NPDC. She said: “Besides, for two of the blocks – OMLs 30 and 34 – before they even started bidding, we looked at both blocks and we realised that they are contiguous and our entire gas supply sources in Utorogu and Ughelli are all there. Some 600 billion cubic feet of gas resides there alone and by 2014 latest we should be producing 600 million standard cubic feet per day…….”

But during the protest by the communities at the National Assembly, they alleged that the minister had secretly transferred production rights in four large oil blocks (OMLs 26, 30, 34, and 42) to Atlantic Energy Drilling Concept Limited. In their petition, the communities alleged that there was “deliberate exclusion of indigenous rights to preemption and/ or first refusal and breach of open and competitive bidding on the four oil blocks.”

They demanded an outright cancellation of “the on-going hand-over of OML 4, 26, 30, 34, 38, 41 and 42 to Atlantic Energy and Septa Energy” and that the deal “be put on hold pending the determination of the issues raised in the petition.”

The alleged transfer of the production rights for four OMLs to Atlantic Energy, which seems to be the basic assumption for the entire group’s other allegations, is flawed. The petitioners also alleged that “by such transfer, 60% ownership of Nigerian Petroleum Development Company’s 55% equity interest in the affected OMLs are transferred to Atlantic Energy Drilling Concept”.

But as the Petroleum Minister did over a year ago, the NNPC has cleared the obvious misunderstanding on the issue in response to the Senate, which is investigating the claims. The OMLs have not been transferred to Atlantic Energy. NPDC produces the OMLs in which companies, other than Atlantic Energy, own stakes, having taken over from Shell.