When Oil Workers Hold the Nation Hostage

as support the technical resources of NPDC, with an ambitious target of increasing the company’s production capacity from 80,000 barrels of oil per day to 250,000 bpd by this year, a target that has not been achieved.

The NPDC later signed another SAA with Atlantic Energy to provide funding and technical assistance for its operatorship of the other oil blocks relinquished by Shell and its JV partners.

NPDC’s Poor Performance

Despite the funding and technical assistance provided by a third party to assist the NPDC to effectively operate the blocks, the company could not achieve its 250,000 bpd target by this year and has recorded a very poor performance in the operatorship of the assets sold by Shell and its partners.

For instance, THISDAY gathered that OML 30, which was acquired by Shoreline Natural Resources, has nine flow stations with combined production capacity of 395,000 barrels of oil equivalent per day (Bopd).

The flow stations include Afiesere, 60,000bpd; Eriemu, 30,000bpd; Evwreni, 30,000bpd; Kokori, 90,000 bpd; Olomoro-Oleh, 60,000bpd; Oroni, 30,000 bpd; Osioka, 15,000bpd; Oweh, 30,000bpd and Uzere West, 60,000bpd.

THISDAY however, gathered that the current output under NPDC operatorship is only around 53,000bpd, leaving 342,000bpd unproduced.

Worried over the impact of the poor performance of NPDC on Nigeria’s target to boost her crude oil production capacity, the Department of Petroleum Resources (DPR) had recommended a Joint Operatorship Model (JOM) to the Minister of Petroleum Resources because of the unsatisfactory performance of the NPDC.

In a memorandum dated December 12, 2014, with Reference No. PI/1124/Vol.18/1, obtained by THISDAY, which was addressed to the Petroleum Minister, the Director of DPR, Mr. George Osahon, had reminded the minister that the investors that bought the divested assets were certified as capable of holding the acreages on the basis of their financial and technical capabilities, predicated on the outcome of the thorough due diligence carried out on the companies by the DPR.

“In order to develop and strengthen the execution capacity of the respective joint ventures between the assignees and the NNPC, often represented by its wholly-owned subsidiary, the NPDC, the DPR is proposing a Joint Operatorship Model (JOM). Under the proposed model, the investor may be designated as the operator and lead an Asset Management Team (AMT) that will spear all activities in the block. The AMT will comprise staff from each of the parties as would be specified in the respective revised Joint Operating Agreements (JOAs). This initiative is expected to offer training and understudy opportunities for NPDC to further develop its capacity in all areas of petroleum operation and compliance,” Osahon explained.

In proposing the JOM, Osahon informed the minister that the DPR had held discussions with the management of the NNPC as the corporation is the central player in all the joint venture relationships.

Osahon’s memorandum, which was approved personally by the minister on December 15, 2014, also recommended that in order to allow the parties to effectively benefit from the technical and financial resources of the farmees as operator in leading AMT, the JOM should be allowed to run for 10 years subject to satisfactory performance.

Osahon also suggested that after 10 years, the NPDC could be requested to assume operatorship or the investor could continue, depending on the assessment by the parties and the DPR.

Following the approval of the DPR recommendations, the Petroleum Minister recently approved the transfer of operatorship of OML 42, to Neconde Energy Ltd, which had bought 45 per cent stake from Shell, Total and Agip.

Elcrest Exploration and Production Nigeria Limited also received confirmation from the DPR that it had fulfilled its obligations, including the payment of the requisite premium and fees of $2.3 million, in relation to its appointment as operator of OML 40 for a minimum 10 year period.

But the oil workers in the employ of the NPDC shut down oil production in all the NPDC-operated joint venture assets in protest against the transfer of operatorship to some of the buyers of the assets.

The workers under the aegis of Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the National Union of Petroleum and Natural Gas Workers (NUPENG) are calling for the reversal of the award of the operatorship to NPDC.

The workers in all the subsidiaries of the NNPC also joined their colleagues in the NPDC on a solidarity strike insisting that, contrary to reports, they have the capacity and competence to operate the divested oil blocks.

The current resistance by the NNPC workers against the transfer of the operatorship is seen by stakeholders as similar to the opposition they mounted against the sale of the refineries on the grounds that they have the capacity to operate them to profitability, which later turned out to be a false claim.

The Federal Government wasted over $400 million on the refineries after the oil workers forced the Yar’Adua administration to cancel the sale, which had been concluded under Obasanjo’s administration.

Today, none of the refineries is working as even the belated attempt by the NNPC to invite the Original Equipment Manufacturers (OEMs) to carry out Turn Around Maintenance (TAM) failed because the activities of Boko Haram insurgents in the north and militants in the Niger Delta scared away the foreign contractors.

Nigerians are now subjected to perennial scarcity of petrol as a result of her weak refining capacity.

Despite their lack of technical and financial capacity to rehabilitate the refineries after forcing the government to cancel the privatisation, the NNPC workers want to arm-twist the government to leave the operatorship of plum assets in the hands of NPDC, which has demonstrated lack of capacity over the years.

Both the present administration and the incoming administration should demonstrate the political will to resist this blackmail by calling off the bluff of the NNPC workers to ensure that Nigeria attains the required greatness in the exploitation of hydrocarbon resources by indigenous operators.