Thirty-one Nigerian exploration licenses were revoked last week in another cleanup exercise to revamp the domestic oil sector. Sixteen licenses were lost last July in a similar exercise, although eight of these may soon be restored.
The companies that had their licenses revoked last week are believed to be part of a group of 48 operators that were awarded concession areas during 1990-94 but allegedly failed to execute agreed work programs. Those companies will be free to compete in Nigeria's newest licensing round, which will be held this month.
In a new twist, the Nigerian government has also indicated that it may acquire interests in indigenous companies that have made large discoveries, supposedly to keep access to oil from being exclusively the province of major companies. Oil makes up over 90% of the nation's foreign exchange earnings.
Officials said acquired equity could reach 20% or more in onshore oil blocks where more than 50 million bbl had been found. The government reportedly will determine the level of equity based on the volume of oil found, terrain of the block, or water depths. Officials said the government might invoke clauses of the Land Use Act of 1978, in which all subsurface minerals were vested in the government.
The licenses
The revoked blocks were originally assigned to Nigerian companies as part of the country's 10-year-old policy intended to develop domestic production capacity. In order to keep the leases, Nigerian entrepreneurs had to pay a minimum $1 million signature bonus and commit to a minimum work program spread out over a maximum of 5 years-typically, acquisition of 50-1,000 km of seismic data and drilling of two or three wells.
Generally, the indigenous company sought an international operator who would take 40% of the lease and act as a technical partner. The companies that lost their leases were either still looking for partners, had not yet begun acquiring seismic data, or had already found their licenses to be nonviable, Nigerian officials said.
Chief executives of some of the affected companies, petroleum ministry officials said, pleaded for more time, citing difficulties engendered by the 5-year rule of the late Gen. Sani Abacha as reasons for their inability to secure foreign partners or execute the agreed work programs. Some even claimed they had to go into exile during the period, leaving their businesses in limbo.
Rilwanu Lukman, special adviser to President Olesugun Obasanjo on petroleum and energy matters, denied the requests, saying that some of the companies had not even paid their original $1 million signature bonus.
The blocks withdrawn and the Nigerian holders are oil prospecting leases (OPLs) 135, Queens Petroleum; 201, Union Square Petrogas; 202, International Petroleum & Energy Co.; 203 and 452, Amalgamated Oil (Supra Investments); 204, Afrioil; 207, Lamont Oil; 227, Ultramar Energy; 233, Petroleum Products Ltd.; 234, Crescent Oil; 235, First Aries; 236, Asaries; 239, Alephtau International; 241, Obekpa; 304, General Oil; 312, Devine Oil; 454, MLM Petroleum; 467, Seagull; 471, Moncrief Oil; 901 and 903, Adax and Oryx Ltd.; 474, Sunlink Petroleum; and 907, Sea Wolf Petroleum. The other leases are OPLs 208, 220, 240, 307, 452, 833, 834, and 841.
Although these companies will be allowed to bid for other blocks during the upcoming round, tightened rules may make some firms ineligible. These companies may be required to submit their bids in conjunction with a foreign technical partner and pay application and bidding fees of $10,000. The revoked blocks may not be included in the first phase of the bidding, expected to involve 10 blocks in the new choice areas of deep and ultradeep offshore.
The names of the eight companies from the July revocation round that are expected to regain their blocks have been forwarded for approval; they include Oziko Energy Resources, OPL 214; Totex Oil, 244; Malabo Oil, 245; Heritage Oil & Gas, 247; Zebra Energy, 248; Oil & Gas Nigeria Ltd., 249; Amni International Petroleum, 250; and North-South Petroleum Nigeria Ltd., 326. The final list will be announced this week by Lukman. A senior official of the ministry, however, warned that the number to be granted reprieve is yet to be determined.
State-owned Nigerian National Petroleum Corp. said the country's proposed acquisition of interests in indigenous companies will allow it to streamline the companies' operations to make them competitive with the multinationals working in Nigeria. Nigerian officials stressed the country's participation in the companies would moderate relationships with potential partners.
Only nine indigenous companies have made substantial discoveries in their oil prospecting licenses. One of these, Famfa Oil, has discovered more than 1.5 million bbl of oil on OPL 216. As a group, those companies are producing 800 to 35,000 b/d of oil.
