Buhari orders NNPC to take over oil block OML 11 from Shell

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President Muhammadu Buhari has issued a directive to the Nigerian National Petroleum Corporation (NNPC) to take over Oil Mining Lease 11 from Shell Petroleum Development Company.

This was contained in a letter from the Presidency to the Group Managing Director of NNPC, dated March 1, 2019, with reference number SH/COS/24/A/8540 and signed by the Chief of Staff to the President, Abba Kyari. The President expressly said that the entire operatorship of OML 11 should be taken over by the NNPC/Nigeria Petroleum Development Company not later than April 30, 2019.

The letter from the Presidency to the NNPC, which had its title as, ‘Operatorship of Entire Oil Mining Lease 11,’ read in part, “Kindly note that the President has directed NNPC/NPDC to take over the operatorship, from Shell Petroleum Development Company, of the entire OML 11 not later than 30 April 2019, and ensure smooth re-entry given the delicate situation in Ogoniland.”

It added that the President has “directed NNPC/NPDC to confirm by 2 May 2019, of the assumption of the operatorship.”

OML 11 is an expansive field in the southeastern Niger Delta which contains 33 oil and gas fields of which eight are producing as per 2017.

Sources from the Federal Ministry of Petroleum Resources, however, noted that there were four partners in the OML 11 joint venture.

“If you are talking about that operatorship, you are talking about a joint venture where you have four partners and you can pick any of the partners to run the asset on behalf of others. And whoever runs the asset will account to the partners when it comes to the sharing table,” a source at the FMPR said.

The source added, “So if you look at some deep water projects or if you look at the OPL 245, that is Zabazaba for instance, it is operated by Agip but Shell has 50 per cent stake in it. So if tomorrow Agip says it does not want to operate the asset anymore and asks Shell to come and operate it, that won’t change anything. Rather it is only the operatorship that will change.”

It was also gathered that the NNPC owns 55 per cent shares in the OML 11 partnership, while Shell, Total and Agip own 30, 15 and five per cent respectively in the joint venture.

Based on the latest directive of the President, the operatorship had moved from Shell to NPDC, the flagship oil exploration and production subsidiary of the NNPC.

Industry players explain that what was transferred to NNPC, based on Buhari’s order, was basically the operatorship of the OML and not the shares of the partners in the joint venture.

Findings revealed that Shell had not produced a drop of crude oil from Ogoniland for about five years and that partners were not earning revenue as a result of this.

“So if another partner is willing to run the asset, I think he should be allowed to try. Four persons own an asset and it is being run by owner number one and owner number one is not able to run the asset for several years, you can try owner number two. That’s what is happening,” another source said.

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