DPR Denies It Cost FG $6bn During Asset Sales by IOCs

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The Department of Petroleum Resources (DPR) has denied the claims by the Nigerian exploration and production (E & P) operators that the federal government lost an estimated $6 billion as a result of its poor administration of the licenses of the oil blocks sold by the international oil companies (IOCs) between 2010 and 2015.

Citing the position of the Nigerian E & P operators, THISDAY had reported that the federal government lost an estimated $6 billion as a result of the agency’s poor handling of the expiring oil blocks, which were sold by the IOCs.

Speaking in Lagos recently at the maiden edition of the Aspen Energy Roundtable, the operators had argued that the IOCs short-changed the federal government when they smiled home with over $10 billion for oil blocks, which were about to expire and be relinquished to the federal government.
They had also noted that the IOCs paid only very little amount as signature bonus for the oil blocks and had recouped their investments after over 20 years of operatorship.

“Some of us who have participated in this E & P business believe that there are issues on how we manage our oil and gas resources. In all the bid rounds the DPR on the Nigerian government had undertaken, I think the highest signature bonus was $210 million on OPL 245 and it was considered outrageous at that time. Before then, signature bonus was $1 million. So, it is wrong for the IOCs to pay $20 million as signature bonus and receive billions of dollars when the licenses are about to expire,” one of the operators had said.

According to the operators, 60 per cent of the over $10 billion paid to the IOCs should have gone to the federal government if the DPR had managed the licences properly.

The Head of Upstream Monitoring and Regulation at DPR, Pat Maseli, had also admitted that the regulatory agency was not prepared for the divestment programme from the outset, as the exercise came as a “shock” to the agency.
But in swift response, DPR said in a statement yesterday that it did not at any time cause the federal government to lose any $6billion in divestment of oil blocks.

 According to the statement, DPR is not involved in the tendering process for divestment of assets held by the IOCs or any other company and only requests for a premium from such transaction that is due to the federal government, which is determined by the Minister of Petroleum Resources pursuant to Paragraphs 14-16 of the First Schedule to the Petroleum Act, 1969.

“Assignment of interest in oil and gas asset is a process of transfer of a licence, lease or marginal field or an interest, power or right therein by any company with equity, participating, contractual or working interest in the said OPL, OML, or marginal field in Nigeria, through merger, acquisition, take-over, divestment or any such transaction that may alter the ownership, equity, rights or interest of the assigning company in question, not minding the nature of upstream arrangement that the assigning company may be involved in, including but not limited to Joint Venture (JV), Production Sharing Contract (PSC), Service Contract (SC) or marginal fields operation,” the statement explained.

The agency further clarified that it has over the years provided effective regulatory oversight for the oil and gas industry in Nigeria and pursuant to this,issued in August 2014 “Guidelines and Procedures for obtaining minister’s consent to the Assignment of Interest in oil and gas assets.”
“The Guidelines have provided the procedures for obtaining Minister of Petroleum Resources Consent to any assignment of right, power or interest in an Oil Prospecting Licence (OPL), Oil Mining Lease (OML) in accordance with the Petroleum Act and Oil Pipelines Act,” the agency added.