Guardian

AFTER gushing crude oil for some 50 years, the oil wells in the Delta State communities in Itsekiri, Ijaw, Urhobo, Isoko and Ndokwa areas are fast approaching their sunset. They have become marginal oil producers from which the international oil joint venture partners are expected to divest their stake.

With little to show for 50 years of oil exploitation, associated gas that has been largely flared over the years and untapped non-associated gas, the affected communities recently rose in protest and petitioned the National Assembly over the on-going divestment processes that ignored their rights to be full participants in an open and competitive bidding for the affected oil mining leases (OMLs) as stipulated by existing laws.

The petition has elicited an advertorial by the Nigerian Petroleum Development Company Ltd (NPDC) which has somewhat lifted the shroud over happenings regarding the four OMLs since 2011. However, NPDC’s stout defence of what has transpired so far failed to address a central issue. Considering NPDC’s touted intention to expand operations by seeking additional asset base in order to secure production capacity of 250,000 barrels per day by 2015, why did Nigerian National Petroleum Corporation, NNPC (which owns 55 per cent equity interest in the subsisting joint venture) not absorb, for assignment to NPDC, the minority 45 per cent stake in the four OMLs from which the international oil companies (IOCs) are divesting?

The advertorial revealed that the four IOCs, which teamed up under Shell in order to operate the NNPC/Shell joint venture arrangement, have sold their respective interests to four separate firms.

Thus NPDC like its parent NNPC before it intends to remain a sleeping majority equity interest partner in four joint-venture marginal operations where the tail would continue to wag the dog. This is unacceptable. It is high time the NNPC or its subsidiary NPDC became active for the sake of Nigeria. The long-awaited Petroleum Industry Act (PIA) should therefore provide for NNPC to acquire fully the four joint-venture operations improperly carved out of the existing single joint operating agreement. That would enable the national oil company to select its production partners transparently under the 2010 Nigerian content law and the Public Procurement Act, 2007 (PPA).

With regard to indigenous oil sector contractors, it should be pointed out that Nigeria is a federation that recognises the principle of derivation. Youth militancy in the Niger Delta arose because of inequity and scant regard for the principle of derivation. Given the serious environmental degradation of oil producing communities, it is provocative and insensitive to assert as was done in the advertorial that “NPDC is as indigenous as any community can claim to be and represents a much wider scope of indigenous rights than the Delta State Oil Producing Communities.” Therefore, the coming Petroleum Industry Act should reinforce, subject to demonstrable capacity or capability, the Nigerian content law by making compensatory provisions for differentiated providers of various services from host communities and catchment or neighbouring areas.

Instead of conniving with IOCs to hoodwink the public, as things seem now, the NNPC along with its subsidiary NPDC should take full advantage of the laws of the land, including expected PIA provisions to build a strong, truly national oil company.