Two years after, claims and counter-claims continue to trail the reallocation of the OML 46, known as the Atala oil field. Its new owner, Halkin Exploration and Production Company Limited, insists it legally acquired the asset in line with existing regulations, MUYIWA LUCAS reports
The call for the revocation and reallocation of the former Oil Mining Licence (OML) 46, known as the Atala Marginal Oil Field, has been loud following its acquisition by its current operator, Halkin Exploration and Production Company Limited. The oil field was formerly owned by the trio of Bayelsa Oil Company Limited (BOCL), Hardy, and Century Exploration and Production Limited (CEPL).
Recently, the battle to reclaim the asset by its previous owners was taken to the presidency when Governor Duole Diri of Bayelsa State, accompanied by his predecessor, Senator Seriake Dickson, amongst others, during a visit to President Muhammadu Buhari requested him to restore the OML 46 to the state. He alleged that it was unjustly revoked and awarded to a private company.
The Senate had also recently, after looking into a petition brought before it by the former co-owner of the oilfield, Hardy Oil Nigeria Limited, ordered the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to revoke the Atala field licence and give it back to its former owners.
Concerns
The basis for the revocation of the licence was not unconnected with the BOCL and its partners’ inability to bring the field to full production as contained in the terms of award. This situation grew to become a source of concern to some of the partners on the project, especially the CEPL. This is because CEPL, as the technical and financial services provider with an “80 percent participatory / funding interest” in the joint venture (JV) partnership, had invested over $100 million in the project as part of its JV funding commitment.
CEPL, in an appeal to the then Department of Petroleum Resources (DPR), via a letter dated October 3, 2019, sought the “urgent intervention of the DPR to manage this asset in the interim due to risk / exposure on this asset (OML 46); the non-alignment of JV partners and the continued loss of revenue to the Federal Government of Nigeria and all stakeholders.” The JV partner was obviously concerned about protecting its “ongoing financial risk exposure to service providers from inception on December 1, 2012 till October 31, 2019 on Atala oil field.”
The October 3, 2019 letter by CEPL to the DPR, which was signed by the Managing Director of CEPL, Osas Uwaifo, was sent one and half years after the extension granted to the BOCL to bring the Atala oil field to full production had lapsed, precisely on April 30, 2018. The now defunct DPR had earlier granted an extension to the BOCL and its partners on the OML 46 on April 12, 2016 to afford it more time to bring the field to full production. The Atala oil field was first awarded to the BOCL in 2003, and its licence expired in 2018 and was subsequently revoked in line with the country’s petroleum laws.
It was also gathered that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which has since replaced the DPR, via a letter dated April 6, 2020, had explained that the revocation of Atala field was because BOCL and its JV partners “failed to develop the field and bring it to full production before the expiration of the granted extension period which elapsed on 30th April, 2018.”
In the April 30, 2018 letter of revocation sent to BOCL, the NUPRC provided a window for the BOCL and its partners to either reapply for the licence or any other licence available in the basket during the “next bid round”. There is no evidence that the BOCL took advantage of the window to reclaim the licence or any other licence.
The Act
For some stakeholders, the revocation and reallocation of the oil field should not be an issue to contest as long as it is established that the oil regulators complied with the provisions of the Petroleum Act. This Act empowers the Minister of Petroleum in its Section 2, to grant and revoke oil field licences.
The procedures for the revocation of oil prospecting licenses or oil mining licences by the Minister of Petroleum is highlighted in Section 25-26 of the Act. The Section states that such licences can be revoked where: the licensee or lessee which is an oil company becomes controlled ultimately or indirectly by a non-Nigerian or a foreigner; the licence granted can be revoked if the licencee or lessees (oil firms) are not conducting their operations or activities continuously or not conducting their operations in a business-like manner by requirements approved for the lessee and not conducting their activities in accordance with good oil field practices; licences granted can be revoked if oil firms fail to adhere to the provisions of the Petroleum Act and other allied regulations or laws. The Minister can also revoke oil licences granted if oil companies fail to pay their rent or royalties within the specified period and if they fail to submit reports on its operations or activities as the Minister may require from time to time.
Going forward
For now, the “Red Chambers” of the National Assembly is the battleground for which the BOCL and its JV partners are seeking a revocation of the licence granted to HEPL. But this wish may be a tall order given the explanation from the new operator of the field, HEPL.
The provisions in the Act may have provided cover for HEPL claims that it legally acquired the Atala oil field. Explaining the state of affairs around the oil asset, its Director of Communications, Mr. Osagie Amusa-Eke disclosed that the Department of Petroleum Resources (DPR) now known as the NUPRC had in 2003 issued 13 licences to indigenous oil firms which expired in 2018. However, as at the time of its expiration, the Atala Field was yet to come into full production. Therefore, he said, following the failure to bring the field into full production, the licence was then revoked and returned to the basket as approved by Buhari, who is also the Minister of Petroleum.
Still, over a year after the licence was revoked by the NUPRC, and in line with petroleum laws, HEPL, he said, legally applied and was duly awarded the OML 46 to operate, on the condition that the company brought the field into full production; and a signature bonus of over $8 million paid to the Federal Government.
“When there were petitions to HEPL being awarded the licence, we were cleared by NUPRC after a thorough investigation of our application process. Within a year of taking over the Atala field, our firm has invested millions of dollars into its operations in the field, deploying over 100 Nigerian personnel on site.
“HEPL is committed to bringing the Atala Field to full production to increase the Federal Government’s revenue. To this end, we have made huge investments and will continue to do so for the duration of the licence. This we will do with our top management team of Nigerians from Bayelsa State and other Niger Delta states. All that we ask is that we are allowed to do the work we’ve been awarded the licence to do,” Amusa-Eke said.
He said his firm continuously engaged its host communities to foster a peaceful working relationship in its operating environment and concluded corporate social responsibility (CSR) projects like solar lighting initiatives for host communities with plans to do more projects. This is the reason why members of the host communities are delighted that HEPL is now in charge of the Oil field.