Oil & Energy

Nigeria And Politics Of Oil Blocks’ Allocation

Published

6 years ago

October 21, 2019

The distribution of assets, income, revenue opportunities and projects among the federating units that form the Nigerian state has remained the central focus of discourse in the country, in recent times. There has been a renewed clamour for increase in the level of equity in access to productive assets and distribution of the proceeds of production.
With Nigeria anchoring all budgetary revenue on the accruable proceeds from oil exploration from the Niger Delta, there are expectations of a commensurate economic development in the region to justify the huge sacrifice. However, the Niger Delta, nay Nigeria, is caught in the web of fundamental contradictions, linking global oil politics, that oil is mostly located in parts of the world different from where it is desperately needed.
This accounts for why the rustic Niger Delta communities from which oil is extracted rarely have access to it. Rather, the predominant feature of the Niger Delta has been unremitting pollution of the natural environment, agitation and conflicts. Thus, the Niger Delta has remained comparatively irrelevant in the main activity of wealth creation as a result of inactivity in oil production.
It is in contention of these sad realities that the recent disclosure by the Minister of State for Petroleum Resources, Timpre Sylva, a Niger Delta son, that the Federal Government would conduct fresh oil block bid in 2020 has continued to generate reactions among critical stakeholders. While many applaud the decision as a bulwark to the development of the Nigeria oil and gas sector, others consider the decision as belated, given the fact that many oil blocks in the country have remained forlorn, while the ones mostly allocated were done based on vested interests and political patronage.
Pundits, therefore attributed the stunt in oil production and revenue generation in the country to these snags and imbalances in the allocation of oil blocks.
Although, the minister did not disclose the oil acreages that would be put out in the expected rounds, or processes to be adopted, he explained that the decision was not only to increase oil revenue but to also expand the space in the oil and gas sector by getting more people involved in the industry.
In apparent reaction to the planned oil blocks bid by the Federal Government, some stakeholders in the Niger Delta have advised the Federal Government to use the opportunity to address what they refer to as conspicuous denial of rights of indigenes of the oil rich region to own oil blocks.
A group known as Host Communities of Nigeria Producing Oil and Gas (HOSTCOM) in a reaction, cautioned against a repetition of the skewed processes that characterised previous allocation of oil blocks in the country, particularly during the military era, which it noted, “undermined the principles of due process and competitive bidding”.
National chairman of HOSTCOM, Dr Mike Emuh, who spoke with The Tide in an interview, said the Federal Government should allocate oil blocks to indigenes of the Niger Delta in the next rounds of bidding, to assuage the injustices and the brunts of oil politics which the people have suffered over the years.
He said: “despite the huge sacrifices the Niger Delta has made in the development of the Nigerian economy through their natural resources, the region still wallows in gross poverty and underdevelopment. The people of the Niger Delta are denied participation in the oil and gas sector through denial of oil blocks ownership, this negates the principles of natural justice. I am using the opportunity to call on the Federal Government to allocate oil blocks to the people of the Niger Delta as part of measures to address issues of under-development in the Niger Delta”.
Another stakeholder in the oil and gas sector and indigene of the Niger Delta, Comrade Inimgba told The Tide that the new bidding process should be able to address the anomalies in the allocation of oil blocks in the past.
He recalled that oil blocks allocation under the military era was not representative of the collective interest of all Nigerians because of the centralised command and discretionary system.
Inimgba, who is the chairman of the Port Harcourt branch of the Independent Petroleum Marketers Association (IPMAN), said discretionary system of allocation of oil blocks amounted to the concession of the nation’s treasures and common wealth to few individuals.
He said: “The politics of oil blocks allocation in Nigeria has been highly contentious as it has not reflected the principle of equity and justice. Most of the people that benefited from the allocation in the past got their allocations on share compromise at the expense of other Nigerians, particularly the Niger Deltans. The idea that the people of the Niger Delta are not technically fit or experienced enough to play key roles in the oil and gas sector is totally erroneous and deceitful”.
He added that the Niger Delta has people who are qualified technically and otherwise to operate oil blocks.
In her views, an activist, Ann Kio Briggs, also raised concern over the injustices perpetrated against the Niger Delta in oil politics.
She said that the Niger Delta had always been at the receiving end of the oil economy, as the dorminant activities of oil production are carried out in the region, noting however, that the indigenes play barely, “passive roles while billions of petrol dollars are carted away from their land to develop other parts of the country”.
She pointed out that such politics of “exploitation, deprivation and exclusion” amounted to gross injustice and urged the Federal Government to give due consideration to the Niger Delta in the planned allocation of oil blocks.
Also in a reaction to the planned allocation of oil blocks by the federal government, human rights activist and fiery lawyer, Femi Falana (SAN), said it was unconstitutional to allocate the nation’s oil blocks to a few individuals.
Quoting section 16(2)(c) of the 1999 constitution as amended, Falana in a letter to the presidency said the constitution prohibited the concentration of wealth in the hands of few individuals or group.
He noted that majority of the owners of the oil blocks belonging to the Nigeria people usually sublease them to offshore companies as they lack the fund and technical expertise to develop the oil and gas industry, and called for the revocation of such oil blocks and marginal fields.
The letter which read in part stated: “By merely collecting huge rents, the oil blocks owners become stupendously rich, while the federal, state and local governments, depend on loans and bail outs to pay salaries and carry out basic infrastructural development”.
Also, former Minister of State for Petroleum, Ibe Kachikwu, while speaking at the Nigeria oil and gas fair in Yenegoa, early this year, lamented that crude oil production in the country had been hovering around 1.9 million barrel per day over the past years.
Kachikwu noted that despite been a major oil producing country, Nigeria was yet to lead investors and producers that are operating across Africa, and emphasised the need for the country to explore its capacity to produce four million bpd of crude oil and abundant gas reserves to generate power.
Report shows that more than 50% of Nigeria’s oil and gas blocks remain untapped even as crude oil production continues to hover around 1.9 million bpd. Out of 390 oil blocks in the country, 211 are reported to be lying untapped due to non allocation by the Federal Government.
With many other countries are increasing efforts to ramp up their oil and gas production and reserves, industry experts have expressed concern over the lack of oil licensing rounds in Nigeria since 2008.
According to the institutional regulator of the petroleum industry, the Department of Petroleum Resources, (DPR), 179 blocks have been allocated as at December 2017, comprising 111 oil mining leases and 68 oil prospecting licenses.
It could be recalled that previous efforts to hold licensing rounds for major and marginal oil fields during the tenure of Dr Ibe Kachikwu as Minister of State for Petroleum Resources were not successful, as the recommendations were reportedly turned down by President Buhari.
Nigerians, however, look up to the planned allocation of oil blocks by the Federal Government in 2020 as an opportunity to address perceived imbalances in the oil economy.

Taneh Beemene

Oil & Energy

Hedge Funds Turn Bearish On Oil, Bullish On Natural Gas

Published

1 month ago

March 17, 2025

The Tide

Traders have not been this bearish on oil in months or so bullish on United States natural gas in years.
The latest data on money managers’ positioning in the WTI and Brent crude and U.S. natural gas futures showed two contrasting trends—speculators are betting that oil prices would remain low or go even lower while increasing the bets that natural gas prices would continue marching higher.
So far this year, geopolitical and supply and demand factors have been increasingly bearish for the oil price outlook and increasingly bullish for natural gas prices.
In the oil market, hedge funds and other portfolio managers have been slashing their bullish bets since the end of January, when the U.S. sanctions on Russia’s oil trade were the primary bullish driver of managed money to bet on a tightening market.
With U.S. President, Donald Trump, now in office, the sentiment has quickly soured amid the president’s insistence on lower oil prices, his efforts to broker an end to the war in Ukraine, and – most of all – the enormous uncertainty about on-and-off tariffs and tariff threats and their potential impact on the American economy.
As a result, market participants are preparing for lower oil prices, even amid expectations of declining oil supply from Iran and Venezuela due to President Trump’s hawkish policy toward these OPEC producers.
Speaking of OPEC, the wider OPEC+ group has just said it would begin increasing supply as of April, adding further downward pressure on prices.
Faced with all these bearish drivers, money managers have been reducing their bullish bets on crude oil futures, with the U.S. WTI Crude hitting the lowest net long position – the difference between bullish and bearish bets – in 15 years at the end of February.
In the week to March 4, the latest reporting week with data released on March 7, speculators bought WTI amid a major selloff in all other commodities except for U.S. natural gas.
The net long in WTI rebounded from the 15-year low, but it wasn’t because the market suddenly started betting on higher prices going forward. The rise in WTI buying and the net long was the result of short covering in the U.S. crude futures contract.
In Brent, hedge funds cut their bullish-only bets in the week to March 4 for the biggest decline in longs since July 2024.
Unlike in crude oil, money managers have become increasingly bullish on U.S. natural gas after inventories dipped this winter to below the five-year average as demand surged in the coldest winter for six years.
The net long in natural gas further swelled in the week to March 4, as the number of new bullish bets was four times higher than the new short positions.
“Natural gas continues to benefit from rising demand, both domestically in the US and towards exports via LNG,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said, commenting on the latest Commitment of Traders report.
At the start of the winter heating season in November, U.S. natural gas inventories were higher than average for the time of the year as America entered the season with stocks at their highest level since 2016.
These stocks, however, were quickly depleted during the coldest winter for six years, with demand for space heating and power generation soaring. A month before the end of the winter heating season, U.S. natural gas inventories have now slumped to below the five-year average and well below the levels from the same time in 2024, at the end of a mild winter.
The lower inventories and the higher demand – both for domestic consumption and LNG exports – have pushed prices higher, encouraging producers to boost gas output this year. Traders bet that prices will go even higher as demand from LNG plants is set to accelerate with the ramp-up of new U.S. export plants.
Paraskova writes for Oilprice.com.

By: Tsvetana Paraskova

Oil & Energy

Renaissance Finalises Acquisition Of SPDC

Published

1 month ago

March 17, 2025

The Tide

Renaissance Africa Energy Holdings says it has successfully completed the acquisition of 100 percent equity holding in the Shell Petroleum Development Company of Nigeria (SPDC).
Spokesperson of the company, Tony Okonedo, who disclosed this in a Press Release, Last Thursday, said Renaissance has completed all processes for the full transfer of ownership of SPDC to the consortium, adding that it will now operate as Renaissance Africa Energy Company Limited.
“Renaissance Africa Energy Holdings today announced that it has successfully completed the landmark transaction between itself and Shell for the acquisition of the entire (100%) equity holding in the Shell Petroleum Development Company of Nigeria (SPDC).
“This follows the signing of a sale and purchase agreement with Shell in January 2024 and obtaining all regulatory approvals required for the transaction. Going forward, SPDC will be renamed as ‘Renaissance Africa Energy Company Limited.
“Going forward, SPDC will be renamed as ‘Renaissance Africa Energy Company Limited’.
“Renaissance Africa Energy Holdings is a consortium consisting of four successful Nigerian independent oil and gas companies: ND Western Limited, Aradel Holdings Plc. FIRST Exploration and Petroleum Development Company Limited and the Waltersmith Group, each with considerable operations experience in the Niger Delta, and Petrolin, an international energy company with global trading experience and a pan African outlook”, the statement reads.
Speaking on the acquisition, the Managing Director/CEO, Renaissance Africa Energy Holding,Tony Attah, said Renaissance Africa Energy Company Limited has a vision to be the leading oil and gas producer in Africa and to help the continent achieve energy security.
Attah expressed gratitude to the Federal Government for its support and pledged the company’s commitment to the Petroleum Industry Act.
“We are extremely proud to have completed this strategic acquisition. The Renaissance vision is to be ‘Africa’s leading oil and gas company, enabling energy security and industrialization in a sustainable manner’.
“We and our shareholder companies are therefore pleased that the Federal Government has given the green light for this milestone acquisition in line with the provisions of the Petroleum Industry Act”, he said.
The CEO acknowledged the contributions of Nigeria’s Minister of Petroleum Resources, the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian National Petroleum Company Limited (NNPCL) in facilitating the deal.
He said, “we extend our appreciation to the Honourable Minister of Petroleum Resources, the CEO of the Nigeria Upstream Petroleum Regulatory Commission (NUPRC), and the CEO of Nigeria National Petroleum Company Limited (NNPCL) for their foresight and belief, paving the way for the rapid development of Nigeria’s vast oil and gas resources as strategic accelerator for the country’s industrial development”.
The Statement further revealed that Renaissance partner companies collectively have an asset base of more than $3 billion and currently safely produce approximately 100,000 barrels of oil per day (bpd) from 12 oil mining leases and operate two functioning modular refineries in Nigeria’s Niger Delta.

Oil & Energy

Oil-Rich Communities Must End Infighting To Access Dev Funds – FG

Published

1 month ago

March 17, 2025

The Tide

The Federal Government has cautioned oil-rich communities against infighting and disruption of oil production, saying it could hinder their access to the Host Community Development Fund.
Minister of State for Petroleum (Oil), Heineken Lokpobiri, made the appeal while speaking at the KEFFESO Stakeholders Forum, in Yenagoa, Bayelsa State.
Lokpobiri noted that the Petroleum Industry Act (PIA) was enacted to bring stability to the oil sector and address longstanding grievances about underdevelopment in host communities.
He lamented, however, that internal disputes among stakeholders have made it difficult for these communities to access and utilize the funds meant for their development.
Lokpobiri insisted that host communities must overcome internal conflicts that hinder their access to the funds.
“This KEFFESO Stakeholders Forum is to see how host communities can maximize the benefits from the Host Communities Trust Funds as prescribed by the PIA.
“If oil production is disrupted, everyone loses — the Federal Government, oil companies, and the host communities themselves. That is why host communities must collaborate with the government and oil companies to ensure smooth operations” Lokpobiri stated.
The Minister called on Host Community Development Trusts (HCDTs) in the Niger Delta to effectively utilize the 3% operational funds allocated to them under the PIA 2021 to drive sustainable development.
He further called that oil-producing communities should take ownership of the oil and gas facilities within their domains and work with relevant stakeholders to ensure sustainable benefits.
“As stakeholders who have their respective stakes in oil and gas operations in the country, we should work together to ensure that we maximize the benefits of oil and gas.”
The minister also emphasized the global push for cleaner energy, warning that the relevance of fossil fuels depends on their extraction and marketability.
“Don’t forget there is a global campaign against the continuation of production of fossil fuel.
“Fossil fuel will never go away. Fossil fuel will not have any value unless you bring it out of the ground or from the sea to the market, that is why we need this collaboration,” he said.
In his remarks, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Omotsola Ogbe, reaffirmed the board’s commitment to leveraging the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
Represented by the Board’s Director of Legal Services, Naboth Onyesoh, Ogbe noted that the NCDMB’s Community Content Guidelines were designed to ensure sustained community engagement as local content is prioritized throughout the oil and gas value chain.
Ogbe praised the KEFFESO Host Community Development Trust for its efforts in ensuring that oil revenues benefit local communities.
Also speaking, the Managing Director and Chief Executive Officer, First E & P, Ademola Adeyemi-Bero, described the KEFFESO Stakeholders Forum as a crucial platform for discussing and strategizing solutions to the challenges facing marginalized communities in the Niger Delta.
He reiterated the company’s commitment to fostering meaningful and sustainable development in the region.
The forum, themed “Envisioning Sustainable Community Development in Niger Delta Host Communities: Identifying Challenges and Actualising The PIA Paradigm Shift,” brought together key stakeholders to discuss strategies for maximising the benefits of the Petroleum Industry Act(PIA).