*Iyabo Obasanjo-Bello benefited from deal *How DPR shot itself in the foot
19 July 2017, Sweetcrude, Lagos – A confidential document obtained recently by SweetcrudeReports has shown how seven oil blocks were discretionally allocated by the office of the Minister of Petroleum Resources in 2008, 2009 and 2011.
The expected revenue from the discretionary allocations, we found, was $414.45 million.
Of this expected $414.45 million, only $231.79 million has been paid to date and $183 million remains outstanding and is due to the nation’s treasury.
The signature bonuses per concession over the period under reviewed range from $150,000 to $310 million.
Of the $414.45 million expected for the seven discretionary allocations, three were awarded at $150,000 each to Afren Energy Services/Oriental, All Grace Energy and Green Energy Nigeria Limited.
Under the Nigerian Petroleum Act, the Federal Ministry of Petroleum Resources, through the Department of Petroleum Resources, DPR, exercises its regulatory functions.
The responsibilities of the DPR include issuing permits and licences for all activities connected with petroleum exploration and the refining, storage, marketing, transportation and distribution thereof. The DPR is also responsible for the day-to-day monitoring of the petroleum industry.
Under the Licensing regime, DPR issues Oil Exploration Licence, OEL, permitting a licensee to explore for petroleum in the licence area for one year, renewable upon satisfaction of certain conditions.
After the OEL, the licensee is given the Oil Prospecting Licence, OPL, which grants licensee exclusive rights of exploration.
Lastly is the Oil Mining Lease, OML, granted to holder of OPL upon satisfaction of all conditions of the licence or the Petroleum Act and having discovered oil in commercial quantity (i.e. a flow rate of 10,000 barrels per day, bpd).
However, one of the factors that have marred the process is discretionary allocation of oil blocks to unqualified bidders, who end up abandoning them for either lack of money or lack of expertise and technology to develop the fields, thereby denying the country revenues from the oil blocks. Also over the years, the process had been characterised by secrecy.
According to the Petroleum Revenue Special Task Force, PRSTF, quoted in the Ribadu Report with Mallam Nuhu Ribadu as the Chairman and Olasupo Shasore (SAN) as Member/Secretary, the Department of Petroleum Resources, DPR, provided it with information indicating that 67 licenses were awarded between January 1, 2005 and December 31, 2011; with an outstanding balance of $566 million in signature bonuses.
For the seven discretionary allocations reviewed, the Task Force found $183 million outstanding, due to the nation’s treasury.
Summing up the outstanding $566 million from the 67 licenses awarded from 2005-2011, and the $183 million outstanding from the 7 discretionally awarded blocks, brings the outstanding to $749 million.
Industry experts say secret allocations are against international best practices, and a slap on the face of the government’s declaration that the process of awarding oil licenses are to be done publicly through competitive bidding.
Iyabo Obasanjo-Bello benefitted from deal
According to documents obtained from the Corporate Affairs Commission, CAC, Iyabo Obasanjo-Bello, the daughter of ex-President Olusegun Obasanjo, was one of the beneficiaries of the illegally distributed oil blocks. The document says she is the major shareholder of All Grace Energy, which was registered on July 12, 2006 with N30 million share capital.
All Grace Energy was one of the companies listed in the Ribadu report as beneficiaries of the discretional allocation within the reviewed years.
Mrs. Obasanjo-Bello has six million shares, followed by other directors/shareholders: Abe Magnus Ngei (2 million), Mrs Abiri Dorcas (3 million), Dr. Adenikinju Adeola (3 million), Ugbeya Donatus (1 million), Alabi Yekini (1 million) and Alhaji Abubakar Abdullahi (1 million).
A source at DPR said that the process of awarding the oil blocks to Obasanjo-Bello’s company actually started during her father’s administration but “a disagreement between Shell and DPR over the area to farm-out could not be reached until when the Malabu Oil block deal was sealed between the Federal Government and the multinationals.”
However, the source did not confirm or deny that Obasanjo-Bello’s company was given the oil block but said the marginal fields were awarded based on some conditions which included the development/execution of a public private partnership, PPP, model for three pilot projects under the small scale gas utilisation scheme.
How DPR shot itself in the foot
Checks on DPR’s list of marginal field owners revealed just 30 companies officially registered and presently in operations.
Obasanjo-Bello’s All Grace Energy and other 29 were registered as “Already Producing Fields” however, reports coming from Ubima community in Ikwerre local government area of Rivers state, where the field is located, revealed there was no indication that such onshore project is being developed.
According to CAC records, the company was registered “to operate marginal fields for the purpose of producing petroleum, natural gas, liquefied petroleum gas etc,” but had filed annual returns only up to 2007.
Investigations showed that each of Nigeria’s bid rounds in 2000, 2005 and 2007 drew less interest and fewer qualified bidders. The only contestants left by 2007 were small independents and indigenous players with low capacity. Only 57 percent of blocks offered in 2005 drew even a single bid; by 2007, the number was 40 percent. This came at a time of strong global competition. In comparison, Libya’s 2005 auction attracted 100 bids for 15 blocks.
Nearly half of the awards in 2005 ended in default. Overall, it appeared that less than 50 contracts were signed on the roughly 175 blocks offered in 2000-2007.
Acreage which in 2005 attracted signature bonuses of over $100 million, but saw bidders default, fetched less than $20 million when re-offered in 2006 and 2007. One OPL netting government $76 million went for $6.5 million two years later. Compare this with Angola, which in the same period captured record-breaking bonuses through open, well-managed bid rounds.