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Oil Block: FG Rakes In $610m

By Clara Nwachukwu

More than $610m was realised by the Federal Government from the sale of 45 oil blocks conducted through an open and competitive bidding conference in Abuja on Friday.

Nigerian Energy Minister, Edmund Daukoru
As stipulated by the rules of the bidding, all the winners of the respective blocks offered collectively deposited a draft of 50 per cent of this amount or over $305m.
This exceeded the $500m amount earlier targeted by government, which opposition parties have argued, was politically motivated in view of the exit of the present administration.
The figure realised would have been more than $1bn, but for the many bids that were nullified because their winners could not produce the 50 per cent of their bid required of them on being declared winners.
The affected blocks include Oil Prospecting Licence 250, which saw Kosmos Energy Nigeria Deepwater Limited, as sole bidder at $50m, but was nullified by the Minister of Energy, Dr. Edmund Daukoru, on the grounds that the amount was too small for the deep offshore block.
The minimum Signature Bonus for the respective blocks were based not only on the terrain but also on their proven reserves ranging from $5m to $30m per block.
Other blocks, which bids were nullified were OPL 251, won by Crownwell Petroleum Development/ Regal Petroleum Plc consortium at the cost of $51m.
The Starex Petroleum Refining Limited bid of $70m for OPL 319, was nullified for presenting a personal, instead of company cheque, while the consortium of Conoil Producing/ECL International Limited bid of $52m for OPL 294, was voided for non-deposit of the 50 per cent of the total sum on the floor of the conference. So also was Oranto Petroleum Nigeria Limited’s $55m bid for OPL 293.
The Director of Petroleum Resources, Mr. Tony Chukwueke, who midwifed the round of a stage warned, “If you don’t have your money, there is no need for you to bid to save time.”
Bidders gave various reasons for not depositing the bank draft as required of participating in the bid conference.
Some claimed their partners were held up in Lagos, others said their banks would bring them before the end of the conference. Some asked for more time to raise the sum.
In spite of the DPR’s warning, Index Commodities Limited fell foul of the same offence by being unable to produce 50 per cent of the $20m bid for OPL 454, while Wilbahi Oil and Gas lost its bid of $11m for OPL 2005, to Sterling Global Oil Resources Group at $9.5m for the same reason.
Coscharis Oil and Gas Limited was forced to deposit N3bn, the equivalent of its bid of $50m for OPL 274.
Despite the furore over placing some 17 blocks under the right of first refusal, only very few of the companies exercised their rights.
Only Dangote, Sterling Global and Clayford Logistics Limited companies exercised their rights during the conference.
Dangote Group was forced to do so by the Conoil Group, which out-bid it in two plum oil blocks OPLs 290 and 2007, in which Conoil became the highest bidder with $105m and $110m with 50 per cent of the sums deposited respectively to Dangote’s $21m and $31.5m respectively.
Electing to exercise the rights on both blocks, the group was given 48 working hours up till Tuesday, to match and deposit 50 per cent of the Conoil bids or forfeit the blocks to Conoil.
Clayford, which was abandoned by one of its major consortium partners, chose to exercise its right by matching the $12m bid by Tenoil Petroleum and Energy Services Limited for OPL 2008, where Clayford had earlier bid $11m.
According to the DPR director, “Because of intense pressure from Exxon Mobil, Sterling Global was forced to abandon the consortium, leaving Clayford, which elected to exercise the right on OPL 2008. Although they brought their 50 per cent cheque late, they have 48 hours also to match the bid and bring the balance of the 50 per cent upon approval by the minister.”
Sterling Global was forced to match the bid by Pan Ocean Oil at $10m for OPL 275, where it had bid $5.1m. Choosing to exercise the right, it was also given 48 hours to clear up.
Successful bidders presented their cheques on the spot included Sahara Energy $6.25m for OPL 228; Moni Pulo utilised its credit of $26.5m left with government on withdrawal from OPL 231, which it won in 2005 at the cost of $76.4m, as deposits for its bids for OPLs 239 and 234, in which it bid $26.5m and $6.5m respectively.

Source: Punch