The one thing that is unclear about the decision of Muhammadu Buhari, the Nigerian President, to remove operatorship of Oil Mining Lease (OML) 11 from Shell and grant it to NNPC, the state hydrocarbon company, is whether he did so in consideration of Shell’s ongoing moves to divest its equity in the asset after it had been renewed.
Or whether the decision was due to pressure by the NNPC.
Or, for that matter, Mr. Buhari was unaware of Shell’s proposed divestiture, but was convinced the AngloDutch major wasn’t doing much with the asset because of the challenges it has operating in Ogoniland, which occupies about a quarter of the block.
OML 11 is the last of the 15, Shell-operated acreages, whose expiring licences have been approved for renewal by the Department of Petroleum Resources (DPR), the country’s petroleum regulatory agency and a parastatal of the Nigerian Ministry of Petroleum Resources.
While the renewal of 14 blocks had been completed, that of OML 11 was kept on hold because it is larger than the maximum areal size allowed for a Mining Lease in the DPR’s current regulations.
And the DPR was working on carving the acreage into three, when a letter signed by Abba Kyari, President Buhari’s Chief of Staff, emerged in circulation, instructing NNPC/NPDC to confirm by May 2, 2019, that they have taken over operatorship of OML 11.
Shell has been in advanced conversation with Transcorp/Tenoil, for the purpose of divesting its equity in OMLs 11 and 17 to the latter, a Nigerian E&P group controlled by the businessman Tony Elumelu.
Officials at the Nigerian Ministry of Petroleum Resources are aware that Shell was in discussion to sell its equity in the lease after renewal, but they argue that the Ministry’s renewal processes are based on the fulfilment of the terms of holding the asset. “Shell can take us to court if we don’t renew”, say some ranking officials in the Ministry.
Officials at DPR received the news of the change of operatorship like most other people: via a grainy, scanned letter on the whatsapp messenger, on Thursday, March 14, 2019. They couldn’t immediately confirm it was authentic. A fuller article on this issue, including detailed analysis of opportunities, risks and challenges in Nigerian oil acreage administration, is published in the March 2019 edition of the Africa Oil+Gas Report, out soon…