February 25, 2024

Over 30 oil blocks under concession to IOCs, says NNPCL

By Our Reporter

More than 36 oil blocks are said to be under concession to international oil companies doing business in Nigeria and their indigenous peers in the country, latest data from the Nigerian National Petroleum Company Limited has revealed.

An analytical overview of NNPCL’s new Consolidated and Separate Financial Statements for the 16-Month Period Ended December 31, 2022, has shown that the blocks are located in deepwater (eight), continental shelf (five), land (15), swamp (five) and partially swamp (three) terrains.

The blocks are segmented into Oil Prospecting Licence and Oil Mining Licence. An OPL is given by the government to an applicant company which has duly registered for exploration and production purposes, while an OML is granted upon confirmation of potential for commercial production of petroleum from the licence.

NNPC’s The national financial statements gave a broad view of the blocks on concession to include OPLs 244, 242, 214, 223, 251 and 325. For the Oil Mining Licences, they include OMLs 154, 139, 119, 60-63, 111, 148, 65, 26, 28 and 30.

Also included are OMLs 34, 64, 66, 4, 11, 13, 24, 98, 38, 49, 41, 40, 86, 88, 42, 20 and 51.

Commenting on the status of the blocks, the report indicated that oil exploration was already ongoing on nine of the blocks, while giving indication of the classification of 20 of the blocks as producing, even as three fell under the development category. Some of the blocks had their status merged.

NNPC Exploration and Production Limited, a subsidiary of NNPCL group, captured as NEPL in the report, owns 100 per cent interest in nine of the blocks including OPL 242, and OMLs 119, 111, 65, 34, 64, 4, 11 and 24.

NNPC through NEPL, has control over different levels of interests in other oil blocks, according to the report.

It named the operating parties handling the concessions in the commercial arrangement to include Agip, ExxonMobil, Mobil, Ashbert, NEPL, AshbertiNNPC, NAOC (Nigeria Agip Oil Company), Enageed, Seplat and Newcross.

Other partners in the deal include Chevron, Oando, Vescar, SO, Nesten, ESSO, TEPNG, Nexen, FHN, Shoreline JV, SPDC, ND Western and Neconde.

Meanwhile, the report noted that “the (NNPCL) Group operates OMLs 11(Aroh field) and 20 (NNPC/Shell JV) and OMLs 49 & 51 (NNPC/Chevron JV) as an agent of the JV partners, These assets are operated for capacity building as the Group is not remunerated for its operatorship.”

NNPCL as a group is in the business of prospecting, exploration and production of crude oil and gas through various wholly owned assets, joint venture arrangements and production sharing contracts with other companies in the industry.

It stated that all the concessions were within Nigeria, adding that “in the Production Sharing Contracts and Joint Venture arrangements, the partics fund the exploration, development and production costs.

“They are reimbursed in the event of successful exploration by the allocation of crude oil produced from the fields under certain terms and the Group is entitled to between 20 per cent and 60 per cent of the profits accruing from the operations. The Group realises its revenue from the sale of the crude oil allocated to it.”

NNPCL, incorporated in Nigeria on September 21, 2021 as a limited liability company under the Companies and Allied Matters Act, as required by the Petroleum Industry Act of 2021, is established to engage in all commercial activities relating to the petroleum industry.

To give credence to the concession of the blocks, the report stated that the national oil company was charged under Section 64 of the PIA to “carry out petroleum operations on a commercial basis, comparable to private companies in Nigeria carrying out similar activities.

“Concessionaire of all Production Sharing Contracts, Profit Sharing and Risks Service Contracts as the national oil company on behalf of the federation. Lift and sell royalty oil and tax oil on behalf of the Nigerian Upstream Petroleum Regulatory Commission and Federal Inland Revenue Service respectively for an agreed commercial fee.”

It further stated that the company had the mandate to “carry out the management of PSCs for a fee based on the profit oil and profit gas lifted and sold. Carry out test marketing to ascertain the value of crude ofl and report to the commission.

“Assume the working interest of NNPC (corporation) in respect of any Joint Operating Agreement it was party to. Engage in the business of renewables and other energy investments.”

The consolidated statements stated that the firm was also charged to promote the domestic use of natural gas through development and operation of large-scale gas utilisation industries.

It has the mandate to engage in activities that ensure national energy security in an efficient manner in the overall interest of the federation, adding that the firm would “serve as a supplier of last resort for security reasons and all cost shall be for the account of the federation.”