NPDC reenters OML 11 with new operating model

…As NNPC warns Shell against further contest

Sopuruchi Onwuka

Nigerian National Petroleum Corporation has declared resumption of operations of production activities by its exploration and production unit, Nigerian Petroleum Development Company (NPDC) at Oil Mining Lease (OML) 11 area onshore Niger Delta.

Group General Manager in charge of Group Public Affairs Department of NNPC, Mr Garba Deen Mohammed, stated that NPDC has launched “operations are in full gear” at the vast oil block after an appellate court sacked Shell Petroleum Development Company (SPDC) Limited from operating the petroleum asset.

Mr Mohammed stated that NPDC is working closely with all stakeholders and partners on a new operating model that emphasizes “responsible, smart engineering and environmental sustainability.”

He said the  new model was part of the vision that the federal government has endorsed for operations in OML 11 where Shell has been sacked by the host Ogoni communities over issues bordering on environmental rascality while operating in the area.

Shell had operated a vast number of petroleum leases onshore Niger Delta with some 25.6 percent interest under a Joint Venture and Joint Operating Agreement in which the NNPC holds overriding 55 stake. Other partners in the JV are TotalEnergies and Eni’s Agip.

Following a range of issues that include hostile relationship with host communities, deep seated pollution in the operating environment, security tension arising from enmity with communities, resulting protracted downtime and asset depreciation, Shell was not able to renew its license to continue operating OML 11.

The first leg of the consequent legal tussle for regain of operating license on the lease area ended in favour of Shell at the High Court, but an appellate court nullified the victory and handed NNPC operating right on the oil block.

Group Managing Director of NNPC, Mallam Mele Kyari,stated that the NPDC would pursue promotion of clean energy through its gas production with prospects of gas-to-power initiatives to “light up opportunities in the region,” and provide the much deserved industrialization.

He also stated that environment would be a top priority for NPDC’s operations, as well as implementation of a robust host community engagement strategy to address Shell’s hostility legacies, while agreeing to a transparent engagement model going forward.

The corporation warned Shell against any further legal challenge, stressing that it was about time Nigeria derived the benefit of the OML11 after over three decades dormancy under Shell’s stewardship.   

“It is time to roll back the decades of despair and destruction with the emphatic Appeal Court ruling. It is time to unlock opportunities for economic development in the region.

“In the light of their inability to work on the Ogoni region of the block for over 30 years and the new beginning this judgment presents, further legal action by Shell will not only be futile, it would be depriving Nigeria of an opportunity to make meaningful gains from OML 11 when the nation needs all the revenue it can get to move Nigeria forward,” Mallam Kyari said.

The corporation hailed the recent appeal court judgment as a huge victory for Nigeria and the beginning of addressing decades of host community restiveness.  

It would be recalled that appeal court sitting in Abuja had on Monday upturned the August 23, 2019 ruling of the Federal High Court, Abuja which held that the Shell Petroleum Development Company was entitled to the renewal of the Lease on OML 11. 

In the ruling, the appellate court held that the Minister of Petroleum Resources has the discretion whether or not to renew the OML 11 Lease in favor of SPDC. The Court further held that the Minister rightly exercised his discretion in awarding the OML 11 Lease to NPDC, a subsidiary of the Nigeria National Petroleum Corporation (NNPC).

Mallam Mele Kyari said the ruling has paved the way for the NPDC to lead a formidable OML 11 team towards bolstering productivity in a responsible, efficient, environmentally friendly, and sustainable manner.

According to him, resumption of operations on OML 11 will demonstrate the NPDC’s full commitment to develop and add value to its communities and the nation as a whole.

“We now have an opportunity to reconstruct a new beginning on OML 11, driven by global best practices and a social contract that would put the people and environment of the Niger Delta above pecuniary considerations.

“This is a huge victory for the government and people of Nigeria as we now have the impetus to responsibly unlock the oil and gas reserves the block offers for the benefit of all Nigerians,” Mallam Kyari stated.

The Oracle Today reports that crude oil accounting allegations; clashes with host Niger Delta people; indictment on poor environmental practices; and media campaigns are legendary in the narratives of Shell’s operations in Nigeria.

Conflicts with community, government and business partners have made Shell a popular figure in courts and arbitration centers across the globe; including cases and investigations of corrupt asset acquisition and indictments on massive environmental pollution in the Niger Delta.

Litigations against Shell’s operational misdeeds and mistreatment of its host community leaders spread from courts in Nigeria to United States and Europe. The Aglo-Ducth multinational continues to lose and win some of the determined cases. A lot of appellate reviews still run on some of the cases.