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Hope for eleven revoked marginal field awards

Sometime in April 2020, the Department of Petroleum Resources (DPR) revoked eleven marginal field awards alleging non-performance by the awardees.

Ironically some of these fields had been brought into production evidenced by production of crude oil volumes. Such produced fields include Atala Field operated by Bayelsa Oi Company Limited, Dawes Island Field operated by Eurafric Energy Limited, Ofa Field operated by Independent Energy, Ekeh Field operated by Movido Exploration and Production Limited, and Ke Field operated by Del-Sigma Petroleum Limited.

Despite professional advice from respective departments of the DPR, protests from the affected awardees, and disregard of their huge financial investments, Engr Auwulu – then Director of DPR, with support from the Minister of State for Petroleum Resources, Timiprey Sylva, insisted on the revocation.

Affected awardees collectively petitioned the President and Honourable Minister of Petroleum, His Excellency, President Muhammadu Buhari, highlighting the effect of the revocation on their business, financial exposure (bulk of which are from Nigerian banks), the Nigerian economy in general and that of host communities in particular.

In appreciation of the petition, the President via a letter dated 24th November 2020, referenced PRES/88/MPR/72 approved the reinstatement of revoked marginal fields.

Auwalu and the Minister of State, however, refused to abide by this directive, hiding behind the subterfuge of acting in the best interest of the country. Their real motive for orchestrating the revocation and disregarding the Presidential directive crystalized when they proceeded to re-award the fields to third parties on very questionable grounds, beginning with the most prolific of the revoked fields.

In the case of Atala Fieild, it was awarded to Halkin Exploration and Production Limited; a company which wasn’t even in existence when Bayelsa Oil Company Limited brought the field to production. Yet Halkin Exploration and Production Limited claims it spent some $60 million in bringing the field to production; a claim which Auwalu supports.

In the case of Dawes Island Field, despite Eurafric Energy contributing 51 per cent of all expenditure on the Field, Auwalu awarded the field to Petralon 54 Limited claiming that only Petralon 54 Limited expended funds in developing the field. While Petralon’s claim to have spent $14 million on the Field, Auwalu claimed they spent $30 million. Interestingly, Auwalu held Petralon 54 Limited -a junior partner to Eurafic Energy Limited- complicit in the alleged non-performance, yet found them fit to be awarded the field solely. Auwalu also connived with Petralon 54 Limited to deny Eurafric Energy Limited fair hearing concerning a petition written by Petralon 54 Limited against Eurafric Energy Limited.

The result of this seeming abuse of office by Auwalu and the Minister of State is a plethora of petitions to the National Assembly seeking oversight intervention as well as several court cases which have encumbered these fields, denying the country any revenue from them in the near future.

In a parallel, yet related development, President Muhammadu Buhari has directed the immediate reinstatement of 11 retired deputy directors in the Department of Petroleum Resources (DPR). They include Dr. M.M. Zagi; Sani Hassan; A. Buba; E. Amadasu; A.R. Shakur; U.B. Nkanga; M. A. Alaku; A.E. Antaih; Bassey Nkanga; Isah Tafida; and J.M. Ajewole.

These Directors were sacked by Auwalu in March 2021 without due process. Some of them had opposed the high-handedness of Auwalu especially as it relates to the revoked 11 marginal field awards; which was unjustified and not in the best interest of the country and the investors. They had also voiced reservation over the then ongoing marginal field bid rounds, which was shrouded in secrecy and not conducted in line with best practices.

With the advent of the Petroleum Industry Act (PIA), split of the DPR into two parts and appointment of new executives for same, there appears to be a ray of hope that this injustice perpetuated by Auwalu and the Minister of State will be addressed.

Of particular import is the confirmation of Gbenga komolafe as the Chief Executive officer of the Nigerian Upstream Regulatory Commission; under which marginal fields fall. Engr. Komolafe is a seasoned technocrat with vast understanding of the petroleum industry, having held senior positions at the highest levels of the downstream and upstream sectors. His accomplishments include; managing director of Nigeria Pipeline & Storage Company (NPSC); general manager, operations of the Petroleum Products Pricing Regulatory Agency (PPPRA); group general manager, special duties at the NNPC; group general manager, crude oil marketing division; general manager, operations, Petroleum Equalisation Fund (PEF); executive director (commercial), Pipelines and Petroleum Marketing Company (PPMC).

Komolafe is distinguished for his integrity and transparency. It is expected that his expertise as a seasoned engineer and lawyer will enable him appreciate the presidential directive and dispassionately implement same without fear or favour.

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