The Nigerian Petroleum Development Company (NPDC), the exploration and production arm of the Nigerian National Petroleum Corporation (NNPC), and First Hydrocarbon Nigeria (FHN), owned by UK-listed Afren Plc, have signed a Joint Operating Agreement (JOA), to develop, explore and produce crude oil from Oil Mining Lease (OML) 26, previously owned by Shell Petroleum Development Company (SPDC), Total and Nigerian Oil company.
The NNPC also confirmed yesterday that the oil majors were divesting 45 per cent of OML 42 to Neconde Energy, a consortium including Nigerian firms Nestoil, Aries and VP Global and Poland’s Kulczk Oil Ventures, but declined to provide details of the transaction or the status of three other blocks- OMLs 30, 34, and 40 offered for sale.
Conoil, belonging to telecommunications, banking, and oil and gas mogul, Dr. Mike Adenuga, had offered $1. 29 billion for OML 30; Nestoil in partnership with Polish-based Kulczyk Oil Ventures Inc and Folawiyo Energy, reportedly offered $800 million for OML 42; Eland-Starcrest Consortium offered $157 for OML 40 while Niger Delta Exploration & Production offered $600 million for OML 34.
But sources familiar with the deals hinted that the issue of who would operate the oil fields was yet to be resolved by parties. The NNPC was said to have insisted that its right of operatorship of the oil blocks was not negotiable, a development, which had since stalled the completion of the transaction.
Local newspaper THISDAY had earlier reported that sources feared that given its track record in the oil and gas sector, the companies were not comfortable with NNPC assuming operatorship of the oil blocks, even though the joint operating agreement stipulates that Shell’s operatorship is not transferable to a third party assignee.
However, the JOA with respect of the OML, which was signed at the weekend, was endorsed by the duo of Group Managing Director of the NNPC and NPDC Chairman, Mr. Austen Oniwon, and the Managing Director of the NPDC, Mr. Abiye Membere, on behalf of the NNPC, while the Chairman of FHN, Mr. Egbert Imomoh, and Chief Executive Officer (CEO) FHN, Mr. Labi Ogunbiyi, signed for the company. Speaking at the signing ceremony, Oniwon said the NPDC had the necessary resources (capital and human) and would work closely with FHN to give quality services to the venture in the interest of both partners.
The GMD said with the assignment of NNPC’s 55 per cent interest in the block to NPDC, the company was on track to achieve its target of production of 250, 000 barrels per day by 2015. “The company’s internal system has been significantly enhanced, providing the company with a hitherto unparalleled level of autonomy and a new board of directors had been inaugurated to support the company’s growth ambitions. This will undoubtedly enable a very quick turn-around of the company.”
He added: “We (NNPC) will not interfere with the business of NPDC, we will always support the company to achieve its set target of becoming an international Exploration and Production company”. He said Shell, Total, NAOC and NNPC had worked together to ensure that the divestment process was hitch free.
Commenting, the Managing Director of SPDC, Mr. Mutiu Sunmonu expressed confidence that FHN and NPDC would work together as a team to develop the block successfully. “The divestment of the IOC’s interests in the block brings to a closure a thorny issue that has been with us for sometime”, he added.
On his part, Imomoh said the vision of the MOU entered into with NPDC a few years ago was being realised with this partnership on OML 26 and FHN would seek for more opportunities jointly with NPDC. He assured stakeholders that FHN would bring professionalism to bear on the venture since the deal holds great potentials for the company and community development as well as safety would take centre stage in the exploration, development and production of the block.
“We will support the growth and development of NPDC within the shortest possible time, now that we have tied the knot,” he said.
On his part, the NPDC MD, Mambere, said he was pleased that the deal had been consummated, and expressed his commitment to work in partnership with FHN to achieve the target of 50, 000 b/d from OML 26 ahead of the 2015 target date. The FHN CEO, Mr. Labi Ogunbiyi, also noted that the transaction would significantly boost the company’sNigeria’s production. “Every journey starts with a first step and ours began two years ago when we formed FHN with a vision to expand local upstream ownership and significantly add toNigeria’s production base. What better way to support the government’s indigenisation programme than to go into partnership with NPDC, the National Oil Company, as we have now done”, he said.
Shell, in conjunction with its multinational oil partners resorted to divest their interest in some onshore fields under a strategy to downsize its on-shore operations in the Niger Delta. Shell is the operator of the NNPC (55 percent); Shell (30 per cent); Total Exploration Nigeria Limited (10 per cent); andNigeriaAgip Oil Company (5 per cent) joint venture. The oil majors had previously divested their 45 per cent interest in OML 4, OML 38, and OML 41 to seplat and recently tendered four additional oil fields – Oil Mining Leases 30, 34, 40 and 42 – to sell their 45 per cent to interested oil companies last year.
