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Stakeholders worried over FG’s double standard in revoking oil licences

Recent revocation of six oil mining leases by the Federal Government for non-payment of royalties is not sitting well with some stakeholders who believe this is sending the wrong signal to investors and lacks transparency.

The Federal Government had reportedly revoked licences of six OMLs and one oil prospecting lease (OPL) in the onshore, shallow water and Deepwater Niger Delta basin over alleged non-payment of royalties.

BusinessDay learnt that the assets affected are OML 98 controlled by Pan Ocean, OMLs 120 and 121 held by Allied Energy, now Erin Energy (which is now bankrupt), OML 108 owned by Express Petroleum, OML 141 held by Emerald Resources, and OPL 206 held by Summit Oil International, a company founded by the late Moshood Abiola.

But some industry stakeholders are alleging double standards in the Federal Government’s action as it was said to have applied different and milder sanctions on other companies that committed the same offence. While the government revoked the licences of some companies, it was learnt that the government only seized the crude belonging to some other defaulters.

The stakeholders say the government action would send the wrong signal to prospective investors in the oil and gas sector as they might fear government severe sanctions at the slightest infraction.

“In terms of correctness, the government acted within the scope of the laws governing the petroleum sector and each breach has a corresponding penalty. Remember also that the minister possesses discretionary powers to revoke or withdraw oil licences,” said Ayodele Oni, energy partner at Bloomfield Law Practice.
“In terms of fairness, that is a different conversation. The government could have chosen to warn the companies or awarded fines for the default in royalty payments. There may be other political undertones but I leave that to political analysts,” Oni added.

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Pan Ocean, Allied Energy, and Yinka Folawiyo were among companies listed inside the Nigeria Extractive Industries Transparency Initiative (NEITI) report as owing the Nigerian government some royalties in 2016.

NEITI specifically stated that Pan Ocean Oil Corporation (Nigeria) Limited failed to make any financial payments in 2016, despite being in Joint Venture (JV) arrangement with the federation.

“The non-payment by these companies will result in revenue loss to the federation. It is worthy to note that Pan Ocean did not make any financial payments in 2016, despite being in JV arrangement with the federation,” NEITI noted.

An industry source close to Pan Ocean Oil Corporation, however, told BusinessDay that a meeting has been slated for stakeholders to have discussion with Emmanuel Ibe Kachikwu, minister of State for Petroleum Resources, on the way out of this situation.

“As a matter of fact, representatives of the Federal Ministry of Petroleum Resources led by the Hon Minister of State for Petroleum Resources, Emmanuel Ibe Kachikwu, and Pan Ocean are currently engaging in high-level negotiations to resolve the issues of outstanding payment as well as related projects tied to the JV and other assets within the vicinity of OML 98,” the source said.

The source added that there are credible indications that Pan Ocean Oil Corporation (Pan Ocean) remains operator of OML 98 Joint Venture, contrary to previous information regarding revocation of seven licences including OML 98.
Similarly, a source in Emerald Energy Resource, who spoke to BusinessDay on condition of anonymity, said the company was not given any revocation letter. He explained that what happened was that there was a time lag in the payment of its royalties and that the money had already been paid to the Department of Petroleum Resources (DPR).

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“The DPR had to write to the minister intimating him about our payment and everything was settled,” the source said, adding that the company had requested for a letter of good standing from DPR.

Source: By  Olusola Bello & Stephen Onyekwelu

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