Forced marriages: FG brokers partnerships among 57 oil field licensees

Sopuruchi Onwuka

Federal government has declared successful resolution fears raised by the awardees of marginal oilfield licenses in working out partnership arrangements that would lead to formation of organizational structures for operating the assets.

Chief Executive of the Nigerian Upstream Regulatory Commission (NURC), Mr Gbenga Komolafe, said the agency which is the administrator of the country’s hydrocarbon exploration lease acreages would provide the winners a guiding template on how to work out partnerships.

The Oracle Today reports that after a lingering bid process, the agency had come out with more winners than there were marginal fields on offer, raising ethical and integrity questions about the process which should make bids competitive and exclusive to the winner.

The 57 awardees of Marginal Fields in the 2020 Bid Round licensees were called for award of lease certificates on Tuesday after about two years of waiting.

Similar processes in the past in which companies were tied together in engineering service agreements with the defunct Nigerian National Petroleum Corporation (NNPC) had generated partnership crises that rendered the agreements unworkable.

Industry analysts and players have raised serious concern about the modalities adopted by the NUPRC in the awards of the marginal fields: from open invitation to secret bidding, lingering processing, haphazard release of bid results and non publication of winners.

After the winners were privately informed of their successes, and it became clear that they have unsolicited partners, more questions have been asked about the criteria for the awards, how much each bidder paid, size of interests, compatibility of the strange partners et cetera.

Given the high rate of partnership failures among players in the petroleum industry, the winners of the fringe oil assets are worried over compatibility with their partners in terms of industry capacity, experience, equity and operational funding, liabilities and other issues that should have been determined ahead of striking partnership deals.

Our sources in the Ministry of Petroleum Resources said some of the awardees were still seeking out and reaching out to their supposed partners as at yesterday when their licenses were issued.

The Oracle Today reports that the new Petroleum Industry Act (PIA) provides for multiple licensing models for one oil block, including mining and exploration licenses for different players in the same location. Arrangements that govern the relationship between different sets of players in one lease area are still being studied.   

The licensees were issued Petroleum Prospecting Licenses (PPL), the PIA version of Oil Prospecting License (OPL).

Mr Gbenga Komolafe said the award of PPL was pursuant to the provisions of the Petroleum Industry Act 2021 which, we understand, provides for roving explorers.

The NUPRC said it had raised a committee to address concerns of awardees bothering on multiple awardees per asset and formation of Special Purpose Vehicles (SPV).

The agency said that the successful coordination and resolution of the issues culminated in the emergence of the successful awardees that were handed over licences.