FG: Committee set up to review Oil Blocks allocation

Mr. Ajumogobia, said even though the review committee was set up to look into the licensing round following a series of complaints that greeted it, it would be unjust to revoke licenses that met all the conditions stipulated in the revised guidelines.

He said the committee has not yet submitted its report but that there was no need for winners who complied with the stipulated guidelines to entertain any fears as their blocks would not be revoked.
The Minister said on the agenda of the current administration was implementation of policies that would encourage inflow of investment into the oil and gas industry with a view to achieving the national aspirations of 40 billion barrels reserves (bbls) of crude oil and four million barrels per day production by 2010.

He counseled that companies willing to participate in exploration activities in the country should ensure that due process is followed to the letter, even as he assured that the review committee would be fair in its judgement.
President Umar Musa Yar’Adua set up a committee to revisit the exercise sequel to complaints by some stakeholders that due process was not followed.
Industry players believe that the bidding round attracted the largest participation of indigenous companies for the first time in the history of Nigeria.

It was a huge success as the country earned about $615 million as revenue from the oil block sales.However, there are fears that should government revoke some of the blocks, the country may end up spending millions of dollars to secure the services of international lawyers to handle the cases that may be instituted outside Nigeria by foreign partners of these local companies.

Some of the local banks are also of the view that revocation of licenses issued during the exercise would discourage their participation in financing of upstream activities. Some indigenous companies were assisted with over $300 million by local banks to enable them pay for signature bonus.
Some oil companies are said to have been pressurising the Federal Government to revoke 18 of the oil blocks awarded to some entities during the May 18 licensing round.
The aggrieved entities are believed to have sent two separate petitions to the Presidency on the need to revisit the exercise which was conducted in the dusk of former President Olusegun Obasanjo administration.

Also, some indigenous companies who were displeased in the manner the exercise was conducted threatened to sue the federal government should it fail to comply with the demand.
The Department of Petroleum Resources (DPR), reacting to the moves, maintained that the exercise was conducted in a transparent manner, noting that the bulk of the criticism which the agency was faced with since the introduction of the open competitive bid are from the traditional players in Nigeria who are not used to open bidding, but are used to government giving them blocks which they sell and make more money for themselves and thereafter pay the government on negotiated bases.

Analysts who also applauded the process had argued that the country would not have made such billions of dollars if the old system was still adopted, noting that “in the year 2000, when the open competitive bid was first introduced, a total of $222million was realized, in 2005, the country realized $1billion, in 2006, $504million, and in 2007, Nigeria topped $502million. This money would not have come if the system did not change”.