The controversy has continued to drag the planned sale of certain oil assets to a consortium of local companies by Shell. While some experts see the move as a ploy to twist the arm of the federal government to avoid certain provisions of the bill of the oil industry (GDP), Shell said it is in the national interest, CHARLES Okonji reports.
What looks like a normal commercial relationship when Shell announced its intention to sell certain oil assets to Seplat Petroleum Company Limited, a consortium of local companies, has been described as a form of threat by the oil giant that could leave the country if the government should insist on the transfer of the bill’s controversial oil industry (GDP).
Country Chairman of Shell in Nigeria, Mr. Mutiu Sunmonu, had insisted that the sale of assets was to support local participation in oil and gas sector, an industry expert has estimated that the explanation was short of waiting, as it was a simple cosmetic.
The source stressed that the decision to sell some assets to local firms was to attract the attention of the federal government on the fact that Shell could sell the country based on the condition of the GDP.
Shell and some operators had begun vehemently against the provisions of GDP, which sought to compel the oil majors to abandon their land dormant in the year following the entry into force of the law and the issue of entitlement to the arbitration.
Sunmonu and Basil Omiyi, outgoing chairman of Shell Companies in Nigeria (CDIS), had repeatedly called on the federal government to examine the area if Nigeria wants to have a robust oil and gas industry.
They also said that the proposal to create Incorporated Joint Venture (IJV) in 12 months was unrealistic and too aggressive given the amount of work necessary to ensure an orderly transition.
Oil producers in the commercial sector (OPTS) of the Chamber of Commerce of Nigeria, Industry, Mines and Agriculture (NACCIMA), the umbrella body the ICC has also asked for more time for smooth transition that does not compromise the operational effectiveness and efficiency of a joint venture (IJV).
Under the proposed bill, opts also noted that the overall impact of multiple taxes, high fees and loss of incentives would have a significant negative impact on gas and deep water operations, stressing that the majority of projects proposed in these areas would not pass investment criteria.
Before his recent move to sell three oil fields – mining leases (OML) 4, 38 and 41, which could produce 50,000 barrels per day – Shell had expressed a desire to sell assets worth $ 5 billion, a decision that Minister of State for Petroleum Resources, Mr. Odein Ajumogobia, immediately condemned, adding that the company had no right to alienate property without the consent of the federal government.
The industry expert who requested anonymity, said: “I can tell you that behind all this is GDP. Now that the company knows it can lose most of the fields on the basis of terms of GDP, he just wants to see how it can move some fields to some of his friends in the local environment and always hide behind them because what I heard from them is that it’s not as if Shell is giving them the fields and start working tomorrow, but it will still be a transmission period of about four or five years.
“Thus, Shell is going to hide behind these local companies, claiming that if oil platform which carries the production on the field he is, Shell Petroleum Development of Nigeria Limited (SPDC) which is operated in the fields . Finally, these marginal fields will not be distributed to others by the federal government. This is what the company wants to do.
“The company wants to maintain its resemblance in these areas. He is just testing the water. If it works, much remains to be done. Thus, when GDP becomes effective only very few fields will be left to the federal government to give to other indigenous operators.
“But the federal government got wind of it. If you remember the first shot was returned to London when the company said it would sell assets worth $ 5 billion. The Minister of State for Petroleum Resources, Mr. Odein Ajumogobia, came to say that it will not happen because Shell has no right to sell its assets to anyone.
“It would have been sufficient warning for the company to retrace his steps and meet the Nigerian National Petroleum Corporation (NNPC) for the win. The company has not always done that and went alone, full power . At the end of it, the company came out with two Nigerian companies, with a French firm, behind them and said these are the people we’ll give these three areas.
“This is not his property and therefore he has no right to give it to anyone. My surprise is that some local operators can fall for this kind of thing
“The federal government has refused to answer. The government expects to see who will go into these areas, and that it is now the operator. I’m sorry for people who get carried away by this feeling. The industry is highly legalized. There are laws, even without the GDP. There are laws of operation, you can not even go to cons.
“There are acts of petroleum which are still valid and these laws clearly provides that, when you did not operate in any area for 10 years or more, the federal government will take back the property. Whatever the reason for your working.
“It may indeed be that the federal government is the one you caused to operate. The law does not open this kind of addition. Any law is that if you did not operate in region for 10 years or more, the asset is reversed for the federal government. ”
Shell oil giant pioneer in Nigeria, which had suffered several attacks by militants in the Niger Delta over the past five years, according to one industry expert, has more than 4,000 communities with oil from oil producing fields .
Production from the fields of earth, which are not accessible due to militancy in the Niger Delta, the source said, had cut oil production by 1.2 million barrels to 200,000 barrels per day, which n is not enough to support a company as big as Shell in Nigeria.
Most oil producing communities, he revealed, would not have Shell as a company in their fields, but she prefers other companies to exploit oil and gas exploration and production sectors which was also part of the reason why Shell was invited local companies to take over the oil blocks, adding that Shell’s move was completely out of the onshore production in Nigeria to the letter.
But Sunmonu, said: “Any suggestion that Shell has sold its assets and went out of Nigeria is misleading and false. We do not sell assets because of the GDP, did not we sell the assets as a precursor to the closure of stores in Nigeria. We have a longstanding presence and commitment to Nigeria. We will continue our onshore and offshore exploration and production activities. ”
The boss of Shell, while also recognizing that companies like other oil and gas operations of Shell in Nigeria have been hit by militant attacks, said: “We recognize that these are difficult times in Nigeria. We face security, funding and other issues that have greatly reduced our onshore production and increased our direct costs. ”
The CEO of the oil platform, a consortium of companies who purchased the three oil exploration licenses from Shell, Mr. Austin Avuru, admitted that security was one of the major risks for Shell and one of the reasons why the local consortium has been moving in to acquire the domains.
Avuru said: “We know that security is a significant risk that we face. There is also a risk we believe we can manage better than multinationals. So it is part of the reason we have considered come in. ”
An industry source said the divestment would not be surprising, given the crisis the company is facing, but “what is surprising is the recipient of this year through the Joint Operating Agreement (JOA ) is shaped between the SPDC, NNPC, Total and Agip. The JOA conferred on the operator of the SPDC joint venture.
He added: “In this position, the hand SPDC can not overnight on the operator of the venture to others, mainly because the NNPC is the majority shareholder. Other shareholders, who are Agip and Total, should have the right of first refusal, because they can also exploit these areas, and they are already in the joint venture.
“Thus, it is surprising that Shell will introduce new actors in the joint venture without the consent of other parties to the joint venture. In the JOA, if a shareholder in the joint venture is opting out, everything the company needs to do is to return capital to the company and any other company within the joint venture can pick it up.
“The company can not go outside of the joint venture for a buyer to purchase its equity, unless there is nobody in the joint venture that wants to choose his actions. For a foreigner to come, all partners must now decide who should collect the share.
“But how it happened now, Shell went out to talk and met and arrangements with certain companies without involving indigenous NNPC and others. At the end of their discussion, Shell is left to say, it was agreed give 30 per cent of its stake in the joint venture for local businesses and at the end of it, Shell has submitted for federal approval, which means he can not do without the approval of partners joint venture.
“Why did the company do it? The asset belongs to the federal government. No International Oil Company (IOC) has the right to alienate property without the consent of the federal government. But that is what Shell has done in this case. The company has now put the cart before the horse.
“At the end of the day, NNPC, Shell now seeks to give approval for the company. What will they tell you? You should throw in the lagoon. Why did not you call us before today? I think Shell has come to this sort of storm of publicity or arm-twisting exercise, he noted.
source: compasnews
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