A Review of the Nigerian Energy Industry

Govt moves to enforce Petroleum Act on divestments of oil blocks

Diezani alison madueke17 January 2014, Lagos – As part of the strategy to control and monitor the sale of oil blocks by the International Oil Companies (IOCs) operating in the country, the Federal Government has invoked the relevant sections of the Petroleum Act that empower the Minister of Petroleum Resources to have the final say on the divestments of Oil Mining Leases (OMLs), THISDAY has learnt.

This development, it was learnt, was also aimed at ensuring that the Federal Government, particularly the Minister of Petroleum Resources decides who acquires the divested OMLs.

THISDAY gathered that though the Petroleum Act vested the minister the powers to grant or withhold consent on the sale of oil blocks by an IOC, the minister is not known to have withhold consent on the recent divestments made by the IOCs.
It was however learnt from the industry sources that following the recent controversies trailing the sale of some oil blocks, the minister wanted to have a firm grip of future transactions and possibly be in a position to decide who acquires a particular OML.

For instance, Chevron Nigeria Limited’s attempt to divest its 40 per cent stakes in Oil Mining Licenses (OMLs) 52, 53 and 55 resulted in a court action by one of the bidders, who alleged that the company wanted to manipulate it out of the transaction.

Two other indigenous companies are heading on a collision over Chevron’s recent sale of its stakes in OMLs 83 and 85 to one of the two firms, as the other firm has dragged Chevron to the Federal Government, alleging manipulations and appealing to the government not to approve the deal.

These recent developments have prompted the Minister, through the Director of the Department of Petroleum Resources (DPR) to invoke the relevant sections of the Petroleum Act.

In a letter with reference number P1/160/A/vol/.10 and dated December 20, 2013, the Director of DPR, Mr. George Osahon informed all the oil companies operating in the country to note that under paragraphs 14,15, and 16 of the  first schedule of the Petroleum Act, the minister reserves the right to impose a fee or a premium, or both before granting consent for sale of oil blocks.

Osahon also drew the attention of operators to the fact that the consent of the minister may only be granted where the minister is satisfied that: “the proposed assignee is of good reputation, or is a member of a group of companies of good reputation, or is owned by a company or companies of good reputation; there is likely to be available to the proposed assignees sufficient technical knowledge, experience and financial resources to work the license or lease which is being assigned; and The proposed assignee is in all other respect acceptable to the Federal government.”

“To comply with the above provisions, companies divesting their assets are required to subject all the pre qualified participants in any such exercise to prior evaluation and due diligence by government through the Department of Petroleum Resources (DPR),” the letter added.
Under the Petroleum Act, all divestments made by the IOCs are subject to ministerial approval.


– Ejiofor Alike, This Day

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