Chinese National Offshore Oil Corporation (CNOOC) are reported to be eyeing the takeover of 16 high-yielding oil mining leases (OMLs) from the hands of international oil companies of mainly European and American extraction operating in Nigeria. They are said to be offering $50 billion to the federal government for the deal. Concerns over losing the OMLs is said to be keeping the IOCs in perpetual lack of sleep in recent times. They are even reported to be lobbying federal legislators to delay passage of the Petroleum Information Bill (PIB) which is currently moving through the National Assembly and would seal their fate in an adverse way if passed in its current form.
The OMLs have been in the management of the IOCs now for well over 40 years and are believed to be highly lucrative despite initial posturing by the IOCs that they don’t a change in the status quo concerning them. The IOCs, made up of mainly Shell, ChevronTexaco, TotalfinaElf, Agip and Exxon-Mobil are not sitting easy due to the fact of the fast approaching expiry at the end of this month of leases they have held since 1968 under terms of a joint venture contract (JVCs). In all the JVs, Nigeria has been represented by the Nigerian National Petroleum Corporation (NNPC) with 51% equity holding while various combinations of the IOCs take part individually or conjointly with differing share participations. Usually, joint venture cash calls are supposed to be contributed by all stakeholders but there have been increasing argumentations about both the management of the joint venture cash calls and the varying levels of dominance which the IOCs maintain in the projects and joint ventures they have run with the federal government. Many have argued vociferously that even the legal terms of the JVs are outdated having been entered into many decades ago and having not been subjected to wholesale reviews. These are seen as justification for the PIB and refreshing of the operating space and conditions.
The PIB has made rapid progress in both chambers of the National Assembly and will repeal several of the existing oil industry legislations, causing radical changes in Nigeria’s oil and gas sector. Leases for the 16 OMLs expired last year and were renewed by the Yaradua administration for one year pending wholesale review. It is widely speculated in oil industry circles that the 16 OMLs may form part of a basket of 23 oil blocks a CNOOC group called Sunrise Consortium hope to pay the federal government $50 billion to acquire for 49% shareholding. The consortium has already applied for this stake in OMLs 67, 68, 70, 11, 13, 71, 72, 74, 77, 79, 83, 85, 86, 88, 89, 90, 91, 95, 118, 127, 133, 139 and 140.
The federal government has already directed the Directorate of Petroleum Resources (DPR) to furnish Sunrise all the data on the blocks while the NNPC has set up a pricing committee to meet with the group for negotiations on their offer.
The federal is said to be looking into the possibilities of making provisions for political settlements of the Niger Delta impasse by having oil bearing communities partake in the stakeholding of the oil ventures as a way to ensure joint responsibilities for safety and security of operations. The PIB made some provisions for this community interest. But while the federal government is open to communities getting their share from any side of the two major divides, the OICs have been kicking against any attempt to take any part of their traditional holding to settle the community interest, among other disagreements. Presently, a breakdown of the 23 blocks shows that 18 are currently held under joint venture arrangements while the remaining five are operated under the PSCs. Of the JV blocks, 16 expired late last year while two are due for renewal in 2019. Also, virtually all the expired blocks are located in the continental shelf (shallow offshore) except the two unexpired ones that are located onshore. The PSCs were only recently converted to OMLs and are not due for renewal until 2020 at the earliest. Expectedly, all the PSC blocks are located in the deepwater and belong in the first set of deep offshore blocks awarded in the 1993 licensing round.
Seven of the OMLs under consideration are held by SPDC of which five expired in November 2008; four are held by Exxon-Mobil of which three expired in December 2008; 10 are held by Chevron of which eight have expired; one is held by Shell Nigeria Exploration and Production Company (SNEPCO – Shell deep offshore subsidiary); and one is held by TotalfinaElf.
If the PIB is passed, it will not be business as usual because the IOCs will have less influence in the operations of the incorporated joint ventures (IJVs), which will now be restructured to reflect the new ownership structure, board composition and management of the leases. Moreover, NNPC will begin to have more say in the day-to-day operations of the JVs, will be able to monitor how they are funded by all the partners in the agreement and will cease to be reliant on the Federal Government for the funding of the leases, as the IJVs can raise money from markets under commercial terms.
MEND picks Soyinka, Akhigbe and others as representatives.
T he Movement for the Emancipation of the Niger Delta (MEND) has released names of Nigerians it said have agreed to represent it in crucial talks with the federal government on ways of resolving the Niger Delta impasse.
The announcement was made just a few days to the expiration of the Federal Government’s amnesty on October 4, a deadline some hardline militants like Tompolo and Ateke Tom are said to be resisting.
MEND calls the team of representatives the Aaron Team and they include former Chief of General Staff, Vice Admiral Okhai Mike Akhigbe (rtd), Prof. Wole Soyinka, Maj.-Gen. Luke Kakadu Aprezi (rtd) and Prof. Sabella Ogbobode Abidde. MEND has also nominated Annkio Briggs.
Some of the persons named have been contacted by the media and they responded in the affirmative and that they were willing to engage in the said talks.
MEND’s spokesperson, Jomo Gbomo, was quoted in the media as saying that the chosen Nigerians had graciously accepted to dialogue on their behalf with the Federal Government, “whenever the government realises the need to adopt serious, meaningful dialogue as a means to halting the violent agitation in the Niger Delta.”
One of the contentions of the MEND is the disarmament process currently being embarked upon by the federal government which the militants have said was flawed. They have said that the Akhigbe-led team would have the mandate to oversee a transparent and proper disarmament that conforms with international standards.
According to the MEND statement: “The hope for peace in the Niger Delta and Nigeria in general now rests squarely on the shoulders of the Nigerian government. Those that hide under the cloak of government to perpetrate the injustice and rape against the Niger Delta have realised we cannot be compromised and that is a major concern to them. But we are confident that at the right time they will be the ones seeking out the Aaron Team to save Nigeria from destruction.”
In a related development, the Ijaw National Congress (INC) has advised the Federal Government to stop treating the amnesty offer as an end in itself and instead tackle the core issues that led to the emergence of militants groups in the Niger Delta.
In an interaction with The Guardian, INC spokesperson, Victor Burubo, said that the government should be concerned about the reason some of the key militants are still reluctant to embrace the amnesty, maintaining that “the amnesty itself, is a contraption of government. It was not a bilaterally agreed matter. It was government that said we are granting amnesty and of course there was a threat of military attack on anyone that does not accept amnesty. The amnesty is not the solution, …we are accepting it cautiously as a means to an end. The government is treating it as if it is an end.”
Carnival as Amnesty Ends, But MENDS fights on.
When the leader of Camp 5 Militant Group in the Niger Delta, Government Ekpemupolo – a.k.a. Tompolo – reputed as the most dreaded of the militants, came to Warri to surrender his arms at the tail end of the federal government amnesty programme in early October, carnival greeted him. On hand to receive him were the Commander of the Joint Task Force (JTF), Brig.-Gen. Sarkin Yaki Bello; Delta State Oil Producing Area Development Commission (DESOPADEC) Chairman, Chief Wellington Okirika; top military commanders and his native Gbaramatu community leaders.
He was accompanied from Abuja where he had gone to meet with President Umaru Musa Yaradua by members of the Amnesty Declaration Committee, led by its Chairman, Air-Vice Marshal Lucky Ararile; the Honorary Adviser to the President on Niger Delta Affairs, Mr. Timi Alaibe; President, Ijaw National Youth Forum, Dr. Chris Ekiyor; among others, in a Nigeria Air Force jet which landed at the Osubi Airstrip, Effurun, Delta State, that morning.
Soon after another Air Force jet carrying Delta State Governor, Dr. Emmanuel Uduaghan, Defence Minister, Maj.-Gen. Godwin Abbe (rtd), other top government and military functionaries also landed to witness the sealing of this agreement by the foremost of the de-hard militants who had kept the Niger Delta off-limits to very many who had reasons to be there because of the oil and gas, maritime and other industries the area is known for.
Nigeria has lost unquantifiable millions of dollars in oil and gas revenue and very much loss of human life as well as credibility in the international community due to the rampant kidnapping of the multinational workforce of the oil industry since the past few years.
However, in a marked departure from the trend, the Movement for the Emancipation of the Niger Delta (MEND) has declined the amnesty offer and insists that a more credible approach is yet to be crafted.
Tompolo at the Abuja meeting with President Yar’Adua had agreed to the terms of the amnesty.
At the Osubi airport ceremony, Tompolo received Dr Uduaghan amidst the carnival atmosphere set up by his native Gbaramatu kingdom and the Niger Delta people who gathered, with some holding banners saying “We want peace in Delta”, “We want peace in the Niger Delta region.” “We are ready to accept the amnesty and ensure that peace returns to our area.”
The trip to Gbaramatu kingdom where the arms were surrendered was preceded by a meeting of the two parties at the VIP Lodge of the Airstrip.
It is not known how far the acceptance of amnesty by these die-hards will deplete the ranks of the MEND but it has been making comments that are not too far from bellicose to describe the actions of erstwhile generals including reports in the media where it said that the amnesty provided the organization an opportunity to make a break with these henchmen and replace them with unknown names and fresh hands. But with the likes of Henry Okah, Tompolo, Farah Dagogo and Boyload and their many foot soldiers solidly ensconced in the arms of the federal security agencies, what leverage the MEND will exercise or the success of any of its subversive activities is yet to be seen. ry. The big question should be where are those weapons today?”
Insecurity forces Shell to Suspend Operations
Shell Petroleum Development Company of Nigeria Limited (SPDC) has suspended its operations in the Western Niger Delta, covering Delta State and parts of Bayelsa State as a result of insecurity to lives and property of its staff. Only the company’s Eastern Niger Delta field operations are now still on-going.
The history of SPDC suspension of activities in this area dates to 2006 when it pulled out of the area but later launched a gradual re-entry programme, culminating in the re-opening of the giant 450,000 barrels per day Forcados export terminal. It also tried to re-open the 115,000 barrels per day EA facility as well as surrounding community development projects.
But renewed attacks on its facilities and workers in the recent past has culminated in the latest abandonment of further operations and the halting of the re-entry programme and the community development projects sine die.
An official of the company who listed the litany of attacks on the company operations and workers since January 7 this year lamented that this new development will impact negatively on revenue generation for all stakeholders which include not just Shell but the federal government.
The attacks were listed as affecting Utorogu-UPS trunk line on January 7; the Amukpe-Rapele manifold attack on January 11; the Trans Escravos-Forcados River manifold attack on February 28; the Trans-Forcados pipeline (Chanomi Creek manifold) attack on June 12; and that on Trans Ramos pipeline on June 16.
Information out of Shell maintains that the company priced the security of its staff as paramount and that it has evacuated non-essential staff from key facilities in the western Niger Delta in order to ensure their safety. The stoppage of community development activities was said to follow from the inability to secure workers.
Shell had recently declared force majeure on Forcados crude oil exports for the remaining part of June and July loadings, noting that militants had renewed attacks on the company’s workers and infrastructure. According to the company had planned to load up to eight cargoes of 950,000 barrels each in May, equivalent to around 245,000 barrels per day but this did not work out.
According to Mr. Precious Okolobo, a spokesman for Shell, both June and July loadings were deferred due to damage to Trans-Forcados Trunkline at Chanomi Creek in Delta State.
Available statistics show that Shell’s total production of Nigeria’s gross crude oil output has fallen from a record level of about 999,000 barrels per day of crude oil in 2003 to less than 500,000 barrels per day.
Militants attack 12 oil facilities, shut down 589,000b/d in two months – NNPC.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Mohammed S. Barkindo, has told oil and gas workers in Abuja that militants in the Niger Delta Region carried out more than 12 attacks on oil facilities in May and June, resulting in the loss of about 589,000 barrels of crude oil per day.
He presented the report in July, and said that over $110 billion oil installations are at risk due to the crisis in the Niger Delta.
Barkindo said the situation was getting out of control in recent times and confirmed that all the major oil companies operating in the region have been hit by the militants.
According to the records: On May 17, the Pipelines and Products Marketing Company’s Escravos-Warri crude pipeline which had a capacity of 117b/d and serves as the main supply line to the Warri Refinery was hit.
On May 24, at Abiteye, Escravos Trunk line belonging Chevron, which is the main trunk line for all CNL swamp production was hit by militants causing a loss of 105,000 barrels per day.
On June 11, according to him, the bulk separator of the Utomama flow station was razed and the Makaraba (V) Well jacket was set on fire on June 13. On June 14, the Abiteye (1) well jacket was also set on fire.
At Ogaga-Brass, the 24inch trunk line which had a volume of 90,000 belonging to Agip was attacked on June 19, but reinstated on June 21, just as the Tebidaba-Brass 18 inches trunk line was attacked on June 7. The attacks affected 27,000 barrels though it was later reinstated.
Pengassan, Nupeng Support deregulation
The national vice president of PENGASSAN, Comrade Mustapha Nuhu Wali has said that oil workers in the country support the deregulation of the oil industry but added that their support was due to the need to encourage private sector participation in building refineries and discourage fuel importation.
Comrade Wali said the position by oil workers was not in any way a shift of ground on deregulation but an effort to bring sanity in the oil and gas industry and to guarantee fuel supply in the country.
He said PENGASAN and NUPENG agreed on the decision at the joint emergency session of the National Executive Council meeting in early July in order to bring change in the sector.
In a communiqué at the end of the meeting, the unions said “that lack of competition in the downstream sector has stalled growth and jeopardised job opportunities”.
They therefore resolved that “any policy that guarantees competition and deliveries of petroleum products to consumers will be encouraged on the ground that the enabling environment and criteria are guaranteed.”
Wali said that what the unions were calling for was to have more refineries and the participation of private sector in the downstream oil sector as against the monopoly by some government agencies in the sector.
Militants to Get Amnesty, N65,000 monthly – Coordinator.
The chief coordinator of the Amnesty Implementation Committee, Air Vice Marshal Lucky Ararile has said that up to10, 000 militants in the troubled Niger Delta could benefit from the amnesty offered by the federal government aimed at ending the crisis in the region.
They would also be entitled to N65,000.00 monthly as monthly and feeding allowances.
Making the announcement in Abuja in mid-July, Mr Ararile said that the federal government had budgeted N200 million to feed the targeted 10,000 militants who agree to lay down their arms and report to the 50 to 60 camps spread across the six Niger Delta states of Akwa Ibom, Bayelsa, Delta, Edo, Ondo and Rivers.
According to him, “We are working on about 10,000 militants. Each militant will receive an allowance of N20, 000 per month in addition to N1, 500 per day for food while at a reintegration centre, translating to N65,000 a month. Disarmament and demobilisation part of the programme will last 60 days. Thereafter, the reintegration programme is indeterminate”.
While declining to specify figures, he said a few militants had already surrendered their arms, explaining that “if you compute 20,000 per month by 10,000 ex-militants, we will be talking of billions of naira. This is for the disarmament and demobilization part of the programme, which is for 60 days. Their duration at the camps will depend on the things they want to do. Some of skills will be acquired at home while others will be sent to relevant institutions to learn a trade, or back to school for those who want an education.
For the re-integration centres, we are thinking of either building new ones or renovating structures that are available. But because of time constraint, we may be forced to renovate. So in certain cases, we are renovating and in others we will build. The degree of renovation varies from facility to facility but there is no fixed figure on that.”
The amnesty coordinator called on more militants to take advantage of the amnesty offer stressing that “it is in the interest of everybody to end this right now. Most Niger Deltans are tired. They are now the victims of this whole struggle. It is virtually impossible for development to take place in the Niger Delta today with the level of violence that we have.”
Media Coordinator of the committee, Dr. Timiebi Koripamo-Agary, exemplified the sufferings taking place in the region by pointing to the consequences of the face-off. “As we have seen in Gbaramatu Kingdom, is that it is the women and children that have been displaced. This is the reason we think the militants should accept this amnesty and save their parents, their mothers, even their grandparents the pain they are going through. If you should visit this camp, you will see a very sorry sight. The activity that led to this displacement shouldn’t have happened”, he said.
the Niger Delta conflict has led to almost halving the production of crude oil in the region since it escalated in early 2006. The federal government’s amnesty period runs from August 6 to October 4, 2009 for all those directly and indirectly engaged in militant activities in the Niger Delta. The release of Mr Henry Okah, alleged leader the Movement for the Emancipation of the Niger Delta in July with all charges against him dropped heightened the efforts of the federal government to bring the conflict to an end.
SHELL resumes production at EA Oilfield.
Shell Petroleum Development Company of Nigeria Limited (SPDC) has resumed crude oil production at its EA oilfield in Bayelsa State, after over three years of closure owing to militant attacks.
The platform, located in Ekeremor Local Government of the state, was shut in on February 18, 2006, when it was attacked by the Movement of the Emancipation of the Niger Delta (MEND), who set a crude oil export tanker ablaze and blew up two oil pipelines at the place. It had also kidnapped nine oil workers – three Americans, two Egyptians, two Thais, one Briton and one Filipino from a boat belonging to Willbros, the US oil services firm.
Shell’s spokesman, Precious Okolobo, who confirmed the resumption of production at the facility in a statement in July said the company would continue to monitor the security situation and also take necessary measures to ensure the security of staff and contractors.
According to him, “SPDC Joint Venture can confirm that production has resumed at EA. Production at the shallow offshore field was suspended in February 2006 due to security concerns. We have worked closely with the authorities and various stakeholders, including communities, and believe normal operations can resume. We continue to monitor the security situation and take all necessary measures to ensure the safety of staff and contractors.”
EA platform has a crude oil capacity of 115,000bpd platform but estimates of shipments from it are between 65,000 bpd and 70,000 bpd for August.