This article by Tunde Disu published in the Vanguard Newspaper of 24 July 2021 with a lot of unanswered questions continues to trend on social media……
Nigeria is a funny country and, despite the big business of comedy which has produced the likes of Ali Baba, Basket Mouth, Julius Agwu, Mr. Macaroni, Taooma and the rest, sometimes, their jokes are not even as funny as the things we read in the news.
Take for example the head-scratching case of Bayelsa State losing the oil mining license it was duly awarded to a company registered in 2019. The question Nigerian oil and gas industry watchers are asking is how could the Directorate of Petroleum Resources (DPR) superintend over this clear injustice? How can Timipre Sylva, a former governor of Bayelsa and incumbent Minister of State for Petroleum, defend the hand-over of his state’s asset to a company which allegedly has no oil and gas industry pedigree?
The questions become very urgent when you consider the fact that the instruction to re-award revoked licenses was clear: President Muhammadu Buhari approved that marginal fields be re-awarded on discretionary basis to qualified companies with consideration given to previous operators of the respective fields subject to the demonstration of technical and financial capacity and payment of applicable Good and Valuable Consideration (GVC).
Why was consideration not given to Bayelsa which has a new governor in Duoye Diri, a man who has shown commitment to reviving the asset? Why hand over OML 46 Atala field to a private concern under Sylva and under whose watch the license was revoked?
To try and make some sense of what is going on, some context is required and maybe, by the end of the explanation, you will be scratching your own head too.
OML 46 was discovered by Shell in 1982 and contained several fields one of which is the Atala marginal field. When the President Olusegun Obasanjo administration announced a marginal field bid round in 2003, Atala marginal field OML 46 was among the assets put up for sale to interested indigenous owners.
Bayelsa government, which had late Chief D.S.P Alamieyeseigha as governor, put in a bid for the Atala marginal field (OML 46). Bayelsa was not the only state that bid for marginal fields. Delta and Akwa Ibom expressed interests in OML 56 and OML 14 respectively.
According to industry sources, Obasanjo was committed to making interested Niger Delta states active players in the oil and gas sector and so made sure that all states that bid got what they bid for and so Bayelsa got Atala field through Bayelsa Oil and Gas Company Limited (BOCL). Delta got OML 56 through Mid-western while Akwa Ibom got OML 14 at Stubb Creek.
But where the Mid-western story, for instance, has been outstandingly successful, Bayelsa’s has been anything but. Once Alamieyeseigha left office, subsequent governors failed to pay attention to the asset. BOCL was starved of funds and the management team was sacked and replaced at will. It was as if the governors were intent on ensuring the company did not become profitable.
While all this was going on, the Operating License of the Atala Marginal Field (OML 46) expired under the watch of the Dickson administration. With the license expired, the DPR formally announced on April 6, 2020 the Revocation of the Marginal Oilfield License it issued to the Atala Oil Field on the grounds that the BOCL JV had failed to turn the asset around for the nation to derive maximum value from the resources.
This decision seemed to have been taken without consideration of the fact that the Atala field (OML 46) had been developed, crude oil produced and sold from the same field at different stages of test crude production. Royalties on crude oil sold from the field had been paid to the Federal Government several times before revocation.
When Governor Douye Diri took office, he made it a key part of his agenda to explore legal options in overturning the revocation. His resolve was strengthened by the fact that as 51% equity holders in Atala, the Bayelsa government had committed considerable resources to the Atala field.
Diri’s exertions soon yielded result with the Federal Government finally approving and directing the immediate “reinstatement of the revoked Licenses on a discretionary basis to qualified companies with consideration given to the previous operators of the respective fields….”
When this instruction was made public, the Bayelsa government must have rejoiced and looked forward to taking back its Atala Marginal field in OML 46. But the whole story soon took a tragic turn.
On February 28, 2021, the DPR wrote a letter to Sylva, Minister of State for Petroleum. Signed by Auwalu Sarki, the letter urged the minister to re-award OML 46 but instead to Bayelsa Oil Company Limited (former operators of Atala Field), the DPR advised the minister to re-award the Atala field to one Halkin Exploration and Production Limited.
The DPR informed the minister that Halkin claims to have “in 2019, through one of its subsidiary companies, received the approval of the board of Bayelsa Oil Company Limited (BOCL former operators of Atala Field) to farm-in to 41% of the field through the execution of Farm/in agreement and Field Management Service agreement with BOCL. The company claims to have invested over sixty million US dollars (US$60,000,000:00) to revive the asset in the process.”
A quick search showed that Halkin was incorporated in 2019; so how did it make such an investment in the asset and, if it did, what is the name of its subsidiary company?
Now let us even consider a few other head scratchers:
Where is proof that as DPR noted in its letter “Halkin E& P” “has the potential to immediately bring the field to production and progress with full development of the asset including the drilling of more wells and production/utilization of the field’s gas resources” when there is no evidence to prove that Halkin has been engaging in oil and gas services and production?
Finally, before handing over OML 46 Atala field to Halkin, is there proof that DPR complied with the clause – with consideration given to the previous operators of the respective fields?
The truth staring everyone in the face is the fact that individuals hiding behind a 2-year-old company have somehow, in cahoots with men in the corridors of power, appropriated the assets of state for their personal use.
What joke could be funnier than this even though no one is really laughing?