FRESH facts have developed on the insistence of the Nigerian National Petroleum Corporation (NNPC) that its subsidiary, the Nigerian Petroleum Development Company (NPDC), should operate oil blocks vacated by Shell in the SPDC joint venture.NNPC's resolve is reportedly in spite of the mounting pressure by some very influential investors interested in the stakes of Shell to operate the fields.However, it was gathered that apart from the reasons provided by the Petroleum Resources Minister, Mrs. Diezani Alison-Madueke, the government, propelled by public interest, 'is really not comfortable with the corporate responsibility profile of some of the prospective investors.'Additionally, unlike in the past, it's learnt that the NPDC has demonstrable capacity to operate oil fields profitably.Besides, the authorities in the oil sector are allegedly relying on the background of the Group Managing Director of the NNPC, Mr. Austen Oniwon, generally renowned as a turn-around expert.With Shell's decision to relinquish its interest in some onshore oil fields, theoperatorship of the affected area had to change.Shell is the operator of the Nigerian National Petroleum Corporation joint venture, otherwise called the Shell Petroleum Development Company of Nigeria (SPDC) (in the ratio of) (55per cent); Shell (30per cent); Total Exploration Nigeria Limited (10per cent); and Nigeria Agip Oil Company (5per cent).Last year, it sold its stake in Oil Mining Leases (OMLs) 4, 38 and 41 to the Seplat Consortium, jointly owned by French oil firms, Maurel & Prom, Platform Petroleum Limited and Shebah Petroleum Development Company Ltd.Similar divestment plans have freed the operatorship of OMLs 30, 34, 40 and 42.Shell, in conjunction with its multinational oil partners, tendered their 45 per cent stake in the four oil fields for sale to interested oil companies last year under a strategy to downsize its onshore operations in the Niger Delta.But in this case, the NNPC decided to exercise its right to operate the blocks.The NNPC is empowered to do so by clause 2.6.2 of the JOA, which states that in the event of assignment, one of the non-operators in the JV shall become the successor operator ' in this case, the NNPC. And the Corporation has automatically transferred the fields' operatorship to its production subsidiary, NPDC, as a growth opportunity.For NPDC, which has been pursuing a new growth plan, this was a welcome development. As revealed by the Petroleum Resources Minister to some stakeholders, including the government, the company has, indeed, 'a robust strategic growth plan.'In a recent interview, Mrs. Alison-Madueke said: 'According to the growth plan, if we followed it, in terms of moving assets or assigning certain assets to NPDC over the next four years or so, by 2015, NPDC should move from a company that was producing approximately 40,000 barrels per day when we came in last year per day to one that will be producing about 265,000 barrels per day. At which point they would be able to rub shoulders with the Petrobrases and Petronases of this world and that is critical for the country.'She cited a recent success story to buttress the ministry's position: 'The first issue I had was with OML 119, for which NPDC has a service management contract with AGIP and a Nigerian indigenous partner. But they now wanted to actually take the block from NPDC, compelling us to go through all kinds of issues, and finally, with the support of Mr. President (Goodluck Jonathan), I was able to resolve the issues pertaining to OML 119 for NPDC.'And because of it, NPDC has gone from 40,000 barrels per day to a company that is producing almost 100,000 barrels a day. So, we looked at other blocks and, of course, the Seplat-Shell issue had already come up. So, we quickly looked at OMLs 4, 38 and 41, and again there was the choice for us to assign (NNPC's stake) to NPDC.'It is for this reason that some of these other blocks ' OMLs 30, 42, 40 and 34 ' that Shell and its partners are selling, were included in the NPDC growth plan just for the main reason of growing NPDC because we consider them national security and economic risks.'The minister added: 'Besides, for two of the blocks ' OMLs 30 and 34 ' before they even started bidding, we looked at both blocks and we realised that they are contiguous and our entire gas supply sources in Utorogu and Ughelli are all there.'Some 600 billion cubic feet of gas resides there alone and by 2014 latest, we should be producing 600 million standard cubic feet per day. Right now, it is about 300 to 350 mscf per day and 150,000 barrels of oil per day. As such, it became immediately clear that you cannot, as government, allow the operatorship of those sorts of assets to go into an individual's hand.'NEVERTHELESS, over the weekend, another top government official familiar with the dilemma and ambush of the petroleum ministry, revealed to The Guardian that, 'indeed, in addition to the sensitivity of the blocks, the performance and corporate responsibility, such as full disclosures and tax payments, of some of the investors to the national economy are not reassuring. Besides, and specifically, they lack remarkable pedigree needed at this moment in the country.'The concerned source continued: 'Look at the current power supply situation in which routine maintenance of some gas plants is causing PHCN to do load-shedding across the country. Don't you think it is important for government to exercise some level of control on strategic fields' Doesn't it make sense to ensure the reliability of operators''The source also described as unconvincing, the claims by some of the prospective investors, who are undertaking media campaigns to show that the NPDC is incapable of operating such strategic fields.'If you talk about capacity, they now have some of the brightest and the best from other companies and if it is money challenge, the NNPC, too, can borrow from abroad as the investors, too, claim they can do.'It was reported recently that the NNPC was seeking a first-time international bank loan of $1.5 billion. The facility would be a five-year syndicated loan.International financial giants, Standard Chartered Bank, Standard Bank and BNP Paribas are known to have submitted bids to source for the loan, which the NNPC is yet to approve.NNPC spokesman, Dr. Levi Ajuonuma, said: 'We are always looking at alternative funding sources, where we suffer shortfalls because of competing demands. This is a large country with a lot of needs and opportunities.'It would be recalled that the NPDC has also gone into Strategic Alliance Agreements with indigenous firms to raise capital. The agreements address the funding challenges of the company without losing the operatorship of the fields.But key to the renewed strength of the NNPC and, therefore, the NPDC, is the efforts of the supervising ministry's commitment to transforming the industry and the quality of relevant teams in the NNPC, to pursue a strategic growth plan for the subsidiary.Industry sources readily point to the competencies of Mr. Austen Oniwon and some bright Nigerians, who were frustrated out of some IOCs and had joined the NNPC Group.Oniwon is reputed for turning around the petrochemical industry as the MD of the Eleme Petrochemicals Company Limited between 2003-2009. Before then, he was specifically mandated to reform the Pipelines and Products Marketing Company (PPMC) as the managing director, but following the changes in the leadership of the Group, he was moved to Eleme.After turning the place around onto the path of profitability, he was opposed to its privatization, and he courageously protested it. Consequently, he was moved to the Research Centre of the NNPC, from where he was appointed the GMD.'That is the man who is now committed to the turn-around of NPDC,' enthused the source over the weekend.Supporting Oniwon are some experienced Nigerian hands that left the International Oil Companies (IOCs). For example, the source said that unlike in the past when the IOCs got their proposals and financial plans rubber-stamped, the NNPC now offers the IOCs a robust challenge; in many cases; throwing their proposals out.'It is not business as usual for the IOCs; the game has changed,' the source said.'These experienced Nigerians, fired by patriotism, are able to challenge claims of their white counterparts in the IOCs using models from various notable oil-producing countries. That is the quality of personnel now available to the NNPC and its subsidiaries.'The source challenged the media to inquire about the trouble with the Petroleum Industry Bill (PIB) 'within the context of the role of the very, very powerful International Oil Companies (IOCs) in the politics that has shaped its alleged sabotage in the federal legislature.''Thank goodness, it was The Guardian on Sunday that wrote the lead story on PIB this year on how the bill would 'wrest sovereignty of the oil industry from the mafia called IOCs that don't exercise such powers in Saudi, Venezuela and even in Libya',' the source added.
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