Delay in oil licence renewals worry investors

Investors have decried the delay in renewal of many oil licenses which are due in 2019, saying that the country may lose the opportunity to attract reasonable amount of foreign direct investments into the oil and gas industry.
The operators said that they cannot take any serious investment decisions because they are at a loss as to what the next line of action of the government would be.
No serious negotiation has started in respect of renewals of many of the licenses, one of them said.
A good number of operators that are apprehensive about the unnecessary bureaucracy surrounding the renewal are the operators of indigenous companies who need the license renewal to as guaranty before they can raise financing or approach foreign firms to invest in their companies.
About 19 of such licenses are due to expire next year but industry sources said the process is too slow.
Reacting to the development Abiodun Adesanya, managing director of Degeconek limited said there are legal basis governing the process of renewal of the licenses.
He said the negotiation must be properly made while the size of the acreages, reserves and many other things are taking into consideration.
He said he believes that progress is being made in respect of the renewal of the licenses but that the unnecessary bureaucratic process may cause investors not want to put down their money down.
“Investments would be hard to come by because of the delay,” he said.
He however said: “Once the right things are done, work programmes approved, and the required fees paid the license would be renewed”.
Oyibo Chambers, former managing director of the Nigerian National Petroleum Corporation NNPC said that he believes that with time all those whose license needed to be renewed would have them renewed.
On whether the delay was caused because the government was planning to withdraw some blocs from their owners, he said, the oil and gas industry is an international one and if any company whether local or international is treated badly it would have repercussions.
“Those running the industry on behalf of the government know what is good for the country”.
President Muhammadu Buhari recently approved the renewal of three onshore oil production licenses, the OML 4, 38 and 41 for a period of 20 years for Seplat Petroleum Development Company
The company is the operator of the oil blocks on behalf of the Nigeria National Petroleum Corporation (NNPC) joint venture and holds 45 percent working interest in the three oil assets located in Edo and Delta States.
President  Muhammadu Buhari and Minister of Petroleum Resources gave consent for the renewal of OMLs 4, 38 and 41 to a new expiry date of 21 October 2038,” the company said.
According  to Roger Brown, chief financial officer,  the first nine months of 2018 production from the three licenses accounted for 92 percent of Seplat’s total oil production and 100 percent of Seplat’s gas production.
“In connection with the license renewal, Seplat has paid in full a Renewal Bonus of $25.9 million, thus ensuring all conditions for license renewal have been met,” the notice read.

OLUSOLA BELLO