27th July
By Bassey Udo, Energy Editor

The Department of Petroleum Resources (DPR), is now holding talks with all oil bloc licensees as well as those granted oil mining leases (OML) for upwards of 10 years without any significant operation or development programme.

DPR Director, Tony Chukwueke, said the major focus of the discussions was to identify those that are just sitting on the oil acreages with a view to recovering them and reintroduced into the nation’s basket of oil blocs to be put on offer in future oil licensing rounds.

The provisions of the Petroleum Act, number 51 of 1969 grants the Minister of Petroleum the rights to approve operational license to interested applicants to be operated for an initial period of 10 years at the expiration of which the oil bloc is withdrawn and reverted to government if the licensee does not find oil.

However, if at the expiration of the 10 years the licensee shows sufficient capacity to develop the acreage to economic value, by hitting commercial production, the Oil Prospecting Licenses (Conversion to Oil Mining Leases Regulations 2004), stipulates that it applies for conversion to an OML, and upon conversion relinquish half of the acreage for government to move in and exercise its "back-in-right" in the converted OML by taking over 50 per cent of the licensee’s interest.

"All the oil blocs that were on offer during the various bidding rounds held so far in the country were relinquished 50 per cent by all operators, whether indigenous and multi-national.

"The policy is not targeted at any particular individual or group. It is not a punitive measure, but a matter of implementing an existing law.

"Prior to 1973, Shell was granted the whole of Nigeria as one oil mining concession by the British colonialists. It was the review of the Petroleum Act of 1969 that forced Shell to relinquish half of its acreage and open for competition the investment space, with the coming of new operators like Mobil, Chevron and others in the industry. "

"If the entire Nigerian oil concession were to remain in the hands of Shell alone till today, Nigeria would probably not attain its current daily production capacity of 2.3 million barrels," Chukwueke explained.