Market Intelligence

Who controls Nigeria’s oil wealth?

by Editor

March 13, 2013 | 1:22 pm
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  Amidst the controversy over the north-south shifting balance in the control of Nigeria’s oil resources, a clearer picture is emerging from the shadowy oil world of the major players, as well as the source and extent of their amazing oil wealth.

Senator Ita Enang fired the first salvo in Abuja last week, when he stated that northern interests control as much as 83% of Nigeria’s oil blocks and then sparked a wild debate over the huge inequitable distribution of wealth in country.

According to information available, the first comprehensive push to grant oil exploration and production (E&P) licences to solely Nigerian citizens began in 1990 under the Ibrahim Babangida military regime, under a bogus plan to promote indigenous participation in the lucrative oil industry.

According to Toyin Akinosho, a petroleum geologist and journalist who worked in an IOC for many years, between 1990 and 1993, leading Nigerians like Folawiyo, Abiola, Adenuga, Udoji, Ibru, Igbinedion, Saleh Jumbo and Mai Deribe, were handed oil blocks.

According to him, “we suddenly had 25 companies that were Nigerian E&P companies and they took themselves so seriously that they set up an association they christened Nigerian Association of Indigenous Petroleum Exploration companies.”

Akinosho says many did not know exactly what to do with the licences, and that of the class, only Adenuga created what you could really call an E&P company, adding that Nigerian indigenous private acreage holders do not produce as a collective, up to 150,000 barrels of oil a day or 7% of total national production.

He went on to state that the Obe field held by Cavendish Petroleum owned by the late Mai Deribe has not produced since 2007 when Trafigura, the last technical partner walked out. Another awardee, Mohammed Indimi, another close friend of Babangida is associated with three oil assets via Oriental Resources which he owns, but that only Ebok field is producing 8,000 barrels of oil daily today, under management by the UK listed Afren. One other field, Okwok is still under development.

Aminu Dantata’s Express Petroleum holds the Oil mining lease 108 which has the Ukpokiti field, which should have made the Dantatas quite rich for the more than seven years the field was under production.

His company has produced another northerner Saleh Mohammed Jumbo, who is linked with NorthEast Petroleum, but not one single drop of oil since Babangida awarded him the licence.

Former Army chief, Theophilus Danjuma is clearly the biggest beneficiary by a wide margin. His sale of 45% equity in his South Atlantic Petroleum Limited, SAPETRO to China Overseas Offshore Company, CNOC should have fetched $2.268bn and today the retired general gets something in the region of 25,600 barrels daily for a 15% share of OML 130 from Akpo field which is delivering 175,000 barrels daily.

Fresh information has also emerged about the link of former oil minister Rilwanu Lukman to Afren, which has never been awarded any oil acreage by any government in Nigeria. According to Akinosho, what Lukman and other Nigerian players in Afren did in 2004 was to use their knowledge of the business to team up with the original promoters of Afren to create what is easily one of Africa’s most successful and professionally run oil firms, instead of angling for award of licence by government. According to one Nigerian analyst, “AfrenPlc is well connected. Rilwanu Lukman, Nigeria’s former minister of petroleum and OPEC Secretary-General for five terms, is one of Afren’s three Nigerian co-founders. Egbert Imomoh and Constantine Ogunbiyi are the other two. Two Liberians, Osman Shahenshah and Ethelbert J.L Cooper are the other co-founders.

“Industry watchers reckon that Lukman’s links with Afren is almost a coincidence – a happy one nonetheless. All the co-founders have stellar oil and gas experience in the Gulf of Guinea. Yet Lukman, bar none, has considerable local and international clout. Still Lukman isn’t the company’s talisman. It’s telling that Afren did not get involved in primary bid rounds held by government for oil blocks, while Lukman was oil minister or adviser. That’s not their strategy. “

Others operating along purely professional lines according to those closely following the industry, are Allied Engery, CAMAC and Petrodel.

Apart from beneficiaries of northern extraction, there have also been favoured ones from the south, even if as another petroleum geophysicist, Samuel Diminas puts it, “while owners of oil blocks and allocations included individuals from across the country, there was an unarguable common denominator, if the blocks or allocations were not owned by generals or northern oligarchs, then the southern owners or fronts had a very strong and recognisable relationship with the ruling generals.”

He cites three cases to buttress this point. Bella field’s OPL 113, a cream among the pack of marginal fields where discovery was made in 1991 and whose prospecting licence was converted to a mining licence ready for development in 1993.

There is also the case of Famfa Oil limited incorporated in September 1991 by the family of Folorusho Alakija, publicly reported as having strong ties to late Maryam Babangida. Famfa was awarded leasehold rights to OPL 216 on August 10, 1993, a mere 16 days before Babangida eased himself from power. Today, Famfa oil is entitled to 25,000 barrels of oil daily from the Chevron operated Agbami field located in deep-water OML 127.

Diminas also cites the case of Moni Pulo limited, owned by another businessman from southern Nigeria.

Former Petroleum Minister Dan Etete also features here through Malabu Oil and Gas Limited’s oil prospecting lease OPL 245 which entered into a mouth watering deal involving a $1bn pay out by Shell and Agip. The leasehold on OPL 245 was awarded by the late General Sani Abacha and court filings suggest a link to one Mohammed Abacha.

Finally, there is the case of Moni Pulo which was incorporated in 1992, by River State business man, Lulu Briggs and awarded OPL 230 now OML 114 in May of the same year. However, unlike many others, Moni Pulo was awarded a frontier exploration lease 30km south of Calabar and the firm went through nine difficult years of exploration and appraisal field development and hit the first oil in the Abana field in March 1999. The case of MoniPulo may have been a rare case of sprinkling the lot with one or two genuine awards by the Babangida regime.

 

BUSINESSDAY INTELLIGENCE


by Editor

March 13, 2013 | 1:22 pm
12893  |   93   |   0  |   Start Conversation

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