PENGASSAN, NUPENG on strike over rights to oil leases

19 May 2015, Lagos – The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, and the Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, branch of the Nigerian Petroleum Development Corporation, NPDC, yesterday shut down exploration activities in the country over the failure to reverse the alleged transfer of the operatorship of Oil Mining Lease, OML 42.

NNPC-logo-335x270The unions had given a notice, which expired on Friday, urging the Federal Government to reverse the transfer of operatorship of the Joint Venture, JV, partnership in OMLs 40 and 42 to Neconde Energy Nigeria Limited and Elcrest Exploration and Production Limited.

A statement from the JV partners, said the shut-in has affected all NPDC operated assets in joint venture with indigenous companies that had applied for operatorship, except Neconde, who, prior to the crisis, had been awarded the operatorship of OML 42, and immediately got the JTF to secure the assets.

Elcrest (OML 40) which is next in line to be awarded operatorship, Shoreline OML 30 and FHN/Afren (OML 26) have now been shut as oil evacuation is hampered from OML 34 which relies on the OML 30 pumping station. The unions had accused the Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke, of stripping the two oil blocks from NPDC, a subsidiary of Nigerian National Petroleum Corporation, NNPC.

In 2011, the Federal Government assigned 55 per cent equity in eight assets divested by the Shell Petroleum Development Company, SPDC to NPDC. The company had since retained the operatorship of most of the assets which included: OMLs 4, 26, 30, 34, 38, 40, 41 and 42. The partners in the statement also expressed worry over the impact of the industrial action on the already crippled country’s economy. According to the CBN Governor, Godwin Emefiele, “Nigeria has faced continued pressure from spiraling debts, in the face of dwindling revenues resulting from falling global crude oil prices.”

They argued that if the industrial action is allowed to persist, it will also affect the power sector as NPDC supplies at least 30 per cent of gas required to generate electricity. According to them, “Over the years, NPDC have been under constant attack for lacking the requisite technical competence and financial muscle to operate the assets in contention effectively and efficiently.

“Under NPDC’s operatorship, all the oil fields have taken a nose-dive in production volumes; obligations to communities have not been met; sharp drop in revenue, etc. All the indigenous companies that are in a JV with NPDC have suffered from the poor performance of NPDC since acquiring the licenses.” They also insisted on “NPDC’s lack of capacity to continue as the operator of the acreages they purchased from the Shell-led consortium. Their argument is that they could have gotten more production out of the fields than NPDC was doing as operator.

The government appears to have finally agreed with them and the perception in the industry is that the remaining three companies will soon have their prayers for operatorship answered.” A management staff of NPDC who pleaded anonymity, was quoted as saying that the strike had resulted from “a breakdown in communication” between the management of the company and the union members.

He further stated that under the new arrangement, the workers stand to benefit more, saying: “Both the NPDC and the indigenous companies are all understaffed, and would require more workers.” “With operatorship rights transferred to the indigenous companies, there is bound to be a sharp increase in oil production; an increase in revenue stream; increased gas supply to domestic markets to improve power generation; community development etc,” he added.

When contacted, NUPENG National Secretary, Comrade Isaac Aberare, said such shift in ownership will affect workers welfare. “Whenever there is a change like this, the interest and welfare of the workers are affected. Also, workers are always paid-off.” He argued that the assets are operating and do not need to be sold. “The asset is a producing field and is not a marginal field. If it is fully operational and working well, why sell it to make others suffer?

“The transfer however, would strip NPDC of its operation on that assets as well as affecting the production, and welfare of the workers. The sale was done without following due process,” he alleged.

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