FG Directs Oil Companies to Renew OMLs

  • Not contemplating issuance of new oil blocks Says legislative squabbles delay quick passage of PIB

Chineme Okafor in Abuja

As a sign of its willingness to allow oil firms to continue to operate existing oil mining leases (OMLs), the Federal Government has directed operators to renew their expiring leases.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who dropped this hint, also confirmed that, while the government had identified up to 45 marginal oil fields it would put out for competitive bid this month, it was not in a hurry to issue out fresh oil blocks to new investors or operators in 2017.

Kachikwu, who spoke to select journalists at the just concluded 2017 edition of the annual Offshore Technology Conference (OTC) in Houston Texas, United States, disclosed that, the government had written to holders of all expiring OMLs to come forward and update their licences.

Besides, the petroleum minister confirmed reports that there were bits of internal disputes between the Senate and House of Representatives about the passage of the Petroleum Industry Bill (PIB).

He, however, informed that he had intervened to get the legislative processes going on the bill, which the National Assembly has failed to pass into law for years now.

An OML is one of the two types of licences issued by Nigeria to oil producers in her oil fields, and they are often with validity period ranging from five to 20 years.

Reports, however, indicate that a good number of OMLs including those held by major oil firms could be up for renewal. The 2015 annual oil and gas report of the Department of Petroleum Resources (DPR), which is the latest on its website, stated that there were 109 OMLs operated either on Joint Venture (JV), Sole Risk (SR) or Production Sharing Contract (PSC) basis by oil companies in the country. Their term limits were, however, not stated in the report.

According to Kachikwu, “My understanding is that by the end of May we should have all the data on the marginal fields. We have identified about 40 to 45 marginal fields, we hope to increase those, we will go forward to a bidding process.

“OMLs renewals, yes we are, we have already sent out letters on those for existing OMLs but in terms of issuing new blocks we are probably not contemplating that for the rest of this year. But marginal fields we will deal with by end of May we should have all the data that we need.”

The petroleum minister also talked about the passage of the PIB by the National Assembly vis-à-vis the legislative differences between members of the House and Senate.

The House as understood had insisted on undertaking its own legislative exercise on the PIB despite the Senate’s request that it (House) adopts what it (Senate) had done at its committee stages with the bill to save time and perhaps financial expenses on repeating the same process. This, it was learnt had not gone down well with the House.

“It is a long story, the Senate has gone quite far and believes it is more of the Senate’s responsibility, and when they finish, they get their colleagues in the House on a joint committee to pass the bill, but the House doesn’t believe that. The House says: ‘no, we are willing to do ours’,” explained Kachikwu.

“The Senate has gone very far, and one of the things I have done is that I have held a meeting with the leadership of the House to try to get them to start their process to catch up with the Senate and they can adopt what the Senate has and look at it rather than begin a fresh process, and I think we are almost aligned on that and they are likely going to adopt what the Senate has and then the joint committee can come up maybe in July,” he further stated.

When pressed to speak a bit on the final expectations from the bill, Kachikwu noted: “I won’t go into the details for obvious reasons because I don’t want to be seen jumping ahead of the Senate. I am happy so far with the cooperation going between both of us. I am also happy that a lot of the initiatives that we created have actually been adopted as part of their PIB.”

“From everything that we are doing when PIB is done and dusted, we should be able to transit very smoothly during the one year transition period, which the minster is supposed to help manage. But I don’t want to go into specifics, the bill is still in its third reading but everything I have seen so far in terms of collaborative work has been very positive,” Kachikwu added.