0ML 42: Stakeholders List Gains from Ceding Operatorship to Nigerian Companies

 

Chika Amanze-Nwachuku

Stakeholders in the Nigerian oil and gas industry have said the grant of operatorship of divested oil blocks  to indigenous companies will boost local participation in the sector,
stem corruption and increase the nation’s oil revenue.

They therefore described as "very insensitive", the industrial action embarked upon by workers in the employ of the Nigerian Petroleum Development Company (NPDC) and its parent company, the Nigerian National Petroleum Corporation (NNPC) over the transfer of operatorship of one of the divested blocks, Oil Mining Lease (OML) 42, to Neconde Energy Ltd.

Some of the oil industry experts, who spoke on the development expressed surprise that this action is coming at a period when Nigeria is in a dire economic quagmire.

One of the stakeholders, who pleaded anonymity, claimed that the industrial action is uncalled for and is fueled by some disgruntled senior management staff of the NPDC, who are not happy that the operatorship rights to the JV assets are being transferred to the indigenous companies who all have a 45 per cent stake in the assets.

Speaking at the just concluded 6th Renaissance Capital Pan-Africa Investor Conference in Lagos, the executive and partner at Africa Capital Alliance, Cyril Odu, stressed the need to plug revenue leakages in the oil and gas sector and unbundle the NNPC.

According to him, this will cut off corruption in the sector and also increase the nation’s oil revenue.
Another stakeholder, who is the  chief executive officer of one of the indigenous companies said: "All of the indigenous JV partners, Neconde (OML 42), Elcrest (OML 40), Shoreline (OML 30) , ND Western (OML 34) and FHN/Afren (OML 26) have the human capacity to operate the assets, with highly skilled Nigerian oilfield professionals; the financial capacity to tap into the equity and debt markets both in Nigeria and overseas with the ability to invest billions of Naira into the drilling of wells and multi-field developments which will increase oil and gas production dramatically and the nations revenue as a whole."

He added: "With the indigenous companies running these assets, skills will be developed across the oil and gas value chain; there will be provision for  sustainable employment opportunities to a large number of Nigerians and an enhancing of the multiplier effect on the host communities by maximizing the participation of local companies and contractors."

Besides, he said with an accelerated asset development, which can only be achieved with the indigenous companies operating these assets, there will be higher oil production to be shared by all equity holders including NPDC who has 55 per cent, higher royalties and taxes; higher overall employment direct and indirect, particularly in Delta communities and higher investment in community development.

In 2014 NPDC recorded a total daily average oil production of only 48,000 bopd from these JV assets, OML 26, 30,34,40 and 42, substantially lower when SPDC was operating them. The year recorded no significant increase in oil production.

"NPDC has repeatedly said it has aggressive production targets ,the question stakeholders are asking is, ‘how does NPDC plan to achieve this at a time when the nation needs the oil revenue more than ever?", an industry expert queried.