Mrs. Diezani Alison-Madueke
Reprieve finally come the way of Elcrest Exploration and Production Nigeria Limited in its protracted oil block transaction with Shell, Total E&P and Agip, with the final closure of existing transaction between partners to the oil block weekend in Abuja.
Having pulled through initial challenges that had almost crippled the divestment of 45 per cent interest in Oil Mining Lease (OML) 40 by Shell and other partners and with the Federal Government’s approval of the stake assignment to Elcrest Exploration and Production Company, parties to the oil block finally signed all necessary documents to legalise the divestment deal.
Elcrest, a joint venture vehicle owned by Starcrest Energy, a subsidiary of Emeka Offor’s Chrome Group and Eland Oil & Gas, had on May 24, 2011 applied for consent of the Minister of Petroleum, Mrs. Diezani Alison-Madueke for the 45 per cent participating interest in OML 40. Without the government’s approval of the deal, the transaction between Shell and Elcrest would have remained illegal and Elcrest also stood the risk of forfeiting 10 percent of the bid price, which was escrowed with JP Morgan in the United Kingdom.
It was however discovered that the delay in getting Federal Government’s approval was occasioned by controversy over the operatorship of the block, as the Nigerian National Petroleum Corporation (NNPC) had insisted that it would not transfer its rights to operate the oil blocks to the new buyers.
Following the settlement of such extant differences, all parties to the deal; Total, Nigeria Agip Oil Company (NAOC), Total E&P, NNPC/NPDC and Elcrest, signed documents that include amendments to the JOA between NNPC and SPDC JV, JOA between NPDC and Elcrest as well as the deed of novation agreement between parties to the oil asset.
OML 40 which is located at SPDC’s Western Operating Division in Niger Delta is reported to have proven and probable reserves (2P) of 225.7 million barrels of oil equivalent and historically produced at less than 5,000 barrels per day before it was capped; the block also has the potential to produce 10,000 barrels per day.
The formal completion of the transaction was conducted in the presence of representatives of the parties; the Group Managing Director of NNPC, Mr. Andrew Yakubu for NNPC/NPDC, Emeka Offor for Elcrest, Managing Director and country Chairman of Shell, Mutiu Sunmonu for his company, Deputy Managing Director of NAOC, Mrs. Funmi Goka for NAOC as well as Executive Director Total E&P, Mr. Olubunmi Obembe for his company at the NNPC Towers.
With the signing of the MoU, Shell and its JV partners have effectively ceded their 45 percent stake in the OML 40 to Elcrest while, the NNPC will retain its 55 percent stake and at the same time assume operatorship of the oil field through NPDC.
However, Yakubu in his remarks at the ceremony said: “Like I have always said, when you look at our performance in the upstream, indigenous performance have been very poor and we are hardly up to 10 per cent production in the upstream but with this step, it is an opportunity for us to grow our in-country capacity.
I also hope that our other partners will look at assets that are producing or not producing and also follow the path of our friend SPDC in encouraging indigenous participation in the upstream to position us in local capacity growth in the hydrocarbon value chain.”
Likewise, Sunmonu said: “I will like to thank every member of the teams that have worked very hard to achieve this closure; this has been a very tough task for you and I like to thank you because this is also one of such rare things when we sign documents, there are some little things are to be done. I also remember that Chief Emeka Offor made a promise to improve the asset and we hope that you will abide by your promise and will not let us down.”
Likewise, Sunmonu said: “I will like to thank every member of the teams that have worked very hard to achieve this closure; this has been a very tough task for you and I like to thank you because this is also one of such rare things when we sign documents, there are some little things are to be done. I also remember that Chief Emeka Offor made a promise to improve the asset and we hope that you will abide by your promise and will not let us down.”
Offor in his reception of legal documents to the asset reiterated his pledge to put the asset in good use, adding that the partnership will continually call for support whenever it needed one from established industry players.
Elcrest had in a competitive bid met the technical and commercial criteria set by Shell to emerge the preferred bidder for OML 40; accordingly, an existing criterion that an indigenous oil firm must emerge as its preferred bidder added to help it clinch the asset.
Eighteen consortia had expressed interests in the oil fields. Top on the list of interested bidders were Mike Adenuga’s Consolidated Petroleum; Femi Otedola’s African Petroleum (AP) now Forte Oil Consortium; and Neconde Energy, of which Nestoil’s Ernest Azudialu, is said to be a member.
Others were Oando Group Plc backed by China’s Addax Petroleum and Perenco, an Anglo-French company; United Kingdom-registered Afren; and Niger Delta Petroleum, allegedly belonging to governments of the South-south states.
Source: ThisdayLive
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