Oil Blocs Controversy: Buhari, NNPC And The Sorry Tale By Ifeanyi Izeze

Without a doubt, the reckless manner the nation’s oil industry was administered by past governments was shoddy, but remains so to this day, even in this dispensation of the “change” mantra where transparency and due process are being flaunted as trademarks of ‘the oga at the top.’ Impunity by the government and its appointees may even be worse now than as witnessed in previous administrations.


How else can anybody describe the claim by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Kacchala Baru, that Oil Mining License (OML) 13 belongs to the Nigerian Petroleum Development Company (NPDC), an operating subsidiary of the state-owned apex oil concern, if not to say that it was an effort at mischief?

OML 13, a 1,923 sq km acreage, hosts the Utapate South and Ibibio fields, as well as a string of producing marginal fields including the Frontier oil operated Uquo, a gas accumulation and the 2,000 bpd Qua Iboe, operated by Network Exploration & Production Ltd.

What was Baru up to in cajoling President Muhammadu Buhari, Nigeria’s substantive petroleum minister, to revoke and allocate to NPDC oil licenses that were duly bidden for, won, and awarded to the successful companies? Did it not occur to the NNPC boss that NPDC as the operating subsidiary of the state-owned apex oil concern and as participant in the Nigeria’s upstream business should be subject to the same laws of the country as any operating company?

Although Nigeria’s extant petroleum laws allow the Minister of Petroleum (who in our current case is also the President of the country) to award oil blocs on discretionary grounds, governance issues in the Petroleum Industry Bill, which the National Assembly is working on to pass into law anytime from now, grossly favors open, transparent and competitive bid rounds as the only transparent way to grant assets/acreages to companies in the upstream sector of the nation’s oil and gas industry, including the NNPC and its operating subsidiaries.

What makes the retrieval and ceding of the oil bloc to NPDC more intriguing is the fact that this same government had, a few weeks before that December 20th presidential transaction, signaled intention to declare a transparent public lease sale of available oil blocs sometime in 2017, so why the hurry and secrecy?

Being fair to President Buhari, let’s assume he acted on the brief he got from the NNPC boss. The question now is: was it deliberate that the NNPC boss did not inform President Buhari that NNPC/NPDC also submitted a bid for one of the extant blocs in the 2007 open licensing round but lost as a result of low bid? So how could Baru misinform the president that the three blocs (2001, 2002, and 2003) belong to NPDC?

That Shell Petroleum Development Company’s license to operate OML 13 was revoked and the acreage ‘back-converted’ to ‘Greenfield’ and resized into three Oil Prospecting Licences (OPLs 2001, 2002, and 2003) was even acknowledged by the NNPC boss in a memo he routed direct to President Buhari and dated December 20, 2016, as reported. He also in his memo acknowledged that the three resultant acreages from the split OML 13 were openly bided and won in the 2007 licensing round.

Would anybody blame the winners of the oil blocks as they are now alleging that the NNPC boss, and the Managing Director of Nigerian Petroleum Development Company (NPDC), Yusuf Matashi, misled President Buhari in their secret meeting of 20th December 2016 to revoke the oil blocks without putting Attorney General of the Federation, Abubakar Malami and the Minister of State for Petroleum, Ibe Kachikwu in the picture.

It beats rational thinking that the NNPC GMD could ask the President who is also the Petroleum Minister, to revoke the 2007open bid awards and merge all the three blocs as in pre-2007 era back to OML 13 and assign it to the NNPC operating subsidiary, NPDC by executive fiat. Haba! Whether Buhari asked for it or not, if Baru forwarded the request direct to the president without seeking legal advice from the Ministry of Justice, or consulting the Minister of State for Petroleum, then there is something sinister in his intentions.

In his memo, Baru was quick to remind President Buhari that “First Schedule of the Petroleum Act, Section 25 grants the minister, the power to revoke any license or lease based on the minister’s opinion of performance on the license or based on non-compliance with the Petroleum Act.”

The NNPC boss also requested the president to grant approval for NPDC to bear “the refund to the offerees of OPLs 2001 and 2003 for the sums of $46 million and $34 million, respectively, and thus absolves DPR of such refund obligation.”

His logic was that “the inadvertent back conversion of OML 13 contravenes the principle of classification of OPLs and OMLs under the First Schedule of the Petroleum Act as the lease area met all requirements for conversion to an OML and already achieved a commercial production of 33,500 bpd of oil equivalent per day, which is above the stipulated 10,000 barrels per day.”

Curiously, the President’s approval was also dated the same day with Baru’s memo of December 20, 2016. So the president read the over 30-page document and approved the same day! Do we still need to ask if there was hidden interest in both the GMD’s request and the President’s approval? What is actually going on in this country?

If the NNPC boss is alleging malfeasance in the manner former president Obasanjo recovered, split and brought the contentious oil blocs to the 2007 open bid round, he should come plain and then let’s look at the issue differently. But if he mischievously got President Buhari to grab back and cede the acreage to his organization, then he may be in for a long haul of controversy.

Now, a Federal High Court sitting in Abuja presided over by Justice John Terhemba Tsoho on April 16th 2017 has issued notice of consequences of disobedience to order of court to the Minister of State for Petroleum, Dr. Ibe Kachikwu, over revocation of three oil blocks in Oil Mining Lease (OML) 13 by President Muhammadu Buhari, who acted in his capacity as the Minister of Petroleum.

The contempt notice against Kachikwu in suit No. FHC/ABJ/CS/21/2017, signed by the Court Registrar, Mr. Felix Udofia, was at the instance of Hi Rev Exploration and Production Limited, one of the three companies that won the blocks (OPL 2002) in the 2007 oil licensing rounds.

We are waiting to see how this entire drama of the absurd will end. God bless Nigeria!


Ifeanyi Izeze writes from Abuja. You can contact him at iizeze@yahoo.com.