Oil blocks: Why licensing round may not hold in December

Shell oil facilities in Bonny


There are strong indications that the oil block licensing round being planned by the Federal Government for December, 2011, may not hold.

Top government sources in the oil industry told our correspondent on Wednesday that the licensing round might not hold for reasons including the fear that the approaching 2011 election might scare investors away.

“Investors will be wary of participating in such a bidding round now because a new government might revoke any licences given just before an election. It happened in 2007, when Obasanjo held a bidding round just before the election and some of the licences granted by his administration were revoked by his successor,” one of the sources said.

Another obstacle against the holding of the round, according to the sources, is the non-passage of the Petroleum Industry Bill. “Investors will like to see the new law in place before they will go into fresh investments,” he added.

It was gathered that the Federal Government had yet to start any planning towards a bidding round.

“We have not heard from government as regards putting the bidding documents together. If the bid round will hold this year, we should have started some preliminary work now, but that is not the case,” another source said.

According to sources, the bid may may not also hold because the President may not be interested in approving a bidding round now, especially when he is busy with preparations for the coming election.

However, key stakeholders in the Nigerian oil industry recently said that a transparent process was essential for the planned bidding round to be successful .

The last bidding round, the 2007 round, was trailed by controversy as many analysts felt the process was stage-managed.

However, the President, Nigerian Association of Petroleum Explorationists, Mr. Isaac Arowolo, said that a transparent process was essential for the success of the bidding round for oil blocks and marginal fields.

Arowolo, said, “The marginal field allocation issue has been on for some time. I think there are a number of other ones government is giving out. Government should be fair in allocation of the marginal fields. They should be given to professionals, credible businessmen, not people that will get them and will be looking for those to sell them to.”

He added, “For the new oil blocks, I want the process to be transparent. We should have a transparent and credible process; it is when we have credible process that we will make progress.

Also, another industry chief and managing partner, Degekonek, Mr. Biodun Adesanya, said that a transparent bidding process for the oil blocks and marginal fields was essential for the progress of the oil industry.

He, however, pointed at some pitfalls that might affect the licensing round. According to him, the fact that the round is going to be held close to an election year, raises some questions on timing.

“Former President Olusegun Obasanjo held one in 2000, just a year after he came in and another one in 2003, an election year. He also held another one in 2007, just before he handed over to late President Umaru Yar’Adua. Thus, another one being held very close to the election raises questions about it being used for political patronage.”

Adesanya also said that the silence surrounding the bidding round was worrying. “There is lack of momentum; no information is being passed out. There is also the issue of the non-passage of the Petroleum Industry Bill,” he added.

Source:http://www.punchng.com/Articl.aspx?theartic=Art2010102806189