A Review of the Nigerian Energy Industry

Two firms on collision course over Chevron’s oil blocks

Chevron Nigeria Office31 December 2013, Lagos – Barely two weeks after Chevron Nigeria Limited’s attempt to divest of 40 per cent in Oil Mining Leases (OMLs) 52, 53 and 55 resulted in a court action by one of the bidders, two other indigenous companies are heading on a collision course over the US oil multinational’s recent sale of its stakes in OMLs 83 and 85 to one of the two firms.

A Nigerian independent, First Exploration and Production (First E & P) recently clinched 40 per cent each in OMLs 83 and 85 belonging to Chevron, closing a seven-month-old bidding process that kicked off in May 2013.

However, it was gathered that another company, Petroleos De Geneve (PDG), has dragged Chevron to the federal government, alleging manipulation and is appealing to the government not to approve the deal.

When contacted on the matter, Chevron’s Manager in charge of Policy, Government and Public Affairs, Mr. Deji Haastrup, disclosed that his company had a policy of not commenting on ongoing commercial transaction. “Chevron has a long time policy of not commenting on ongoing commercial transactions. This transaction is still ongoing. So, we have no comment on it,” he said.

A relatively new player in the upstream business, First E&P’s track record is limited to its 10 per cent stake in ND Western, the consortium which bought Shell, Total and Eni’s combined 45per cent equity in the gas rich OML 34, for $600 million in August 2012.

The data room for OMLs 83 and 85 was opened one month before bids were invited for OMLs 52, 53 and 55 but the investors’ huge appetite for the three onshore leases overshadowed the bidding process for the less-attractive OMLs 83 and 85.

However, the OMLs 52, 53 and 55 transaction has since shifted to a Federal High Court sitting in Lagos, thus enabling Chevron to conclude the sale of OMLs 83 and 85.

Petroleos De Geneve, it was learnt, is claiming to have submitted higher bids than First E & P in the OMLs 83 and 85 deal.

By the terms of the bidding process, the bidders were required to provide standby Letters of Credit.

But Chevron was said to have alerted Petroleos De Geneve that it could not receive written confirmation from a South African bank on the Letters of Credit issued by the bank to PDG.

However, PDG is claiming that contrary to Chevron’s claim that it did not receive confirmation from the South African bank, the bank actually confirmed their LC to Chevron.

It was gathered that First E&P fulfilled all the requirements of the bid process but PDG has insisted that its bid was actually higher than the bid submitted by First E & P.

PGD, it was learnt, has dragged Chevron to the federal government, which has the final decision to approve the sale in line with the Joint Operating Agreement (JOA) between the Nigerian National Petroleum Corporation (NNPC) and its joint venture partners.

The federal government, through the NNPC owns 60 per cent stakes in the two OMLs.

OML 83’s Anyala and OML 85’s Madu fields, are very prospective acreages, which Chevron inherited after it acquired Texaco in the late 90s, shortly after the discovery of the two fields.

According to the Information Memorandum (IM) from Chevron, OML 83’s Anyala field has discovered total resource and upside potential of over 200 million barrels of oil equivalent (MMBOE).

Discovered in 1992, OML 85’s Madu field has discovered total resource and upside potential of over 140MMBOE.

According to Chevron, approximately 45 per cent of discovered resource is gas.
*Ejiofor Alike, Thisday

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