NNPC Moves to Frustrate $160m Modular Refinery Initiative

THE termination of the construction of a modular refinery in Akwa Ibom State by Hi Rev Exploration and Production Company is sending conflicting signals to the oil and gas sector. It concerns the position of the Nigerian National Petroleum Corporation, NNPC, to frustrate the building of modular refineries in the Niger Delta to compete with its existing three refineries.

Curiously, the memo which was written by Maikanti Baru, group managing director of the NNPC, dated December 20, 2016, was read, approved and signed personally by President Muhammadu Buhari same day.

Additionally, a letter conveying the President’s approval of the NNPC request was also written by Abba Kyari, chief of staff to the president, on the same December 20, 2016.

The letter had reference number: PRES/158/NNPC/38. Abba Kyari is a member of the NNPC Board. The Baru’s memo titled, ‘Restoration of OML 13 to NPDC’, which was obtained by The Guardian in Abuja, said the revocation was sought because Hi Rev Exploration and Production Limited did not take up the Oil Prospecting Licence (OPL) 2003 which Department of Petroleum Resources (DPR) offered the company on June 16, 2015.

In the memo to the President, Baru explained that the Nigerian Petroleum Development Company (NPDC), as the operator of the field named ‘Utapate oil field’ in 2007 was at the verge of re-entering the field when the lease was withdrawn and the OML 13 Lease was re-sized into three acreages of OPLs 2001, 2002 and 2003 resulting in Signatures bonuses of $46 million, $66 million and $34 million respectively during the 2007 bid round and which reached final award in May 2015. The field was also converted from brown field to a Greenfield.

In the corporation’s prayers to the President as the Minister of Petroleum Resources, Baru said: “… that OML 13 which was inadvertently revoked and back-converted be restored 100% enbloc to NPDC; that NPDC bears the refund to the Offerees of OPLs 2001, 2002 and 2003 for the sums of $46 million and $34 million respectively which and thus absolves DPR of such refund obligation.” These were the prayers President approved same day this memo was written.

In the letter of offer to Hi Rev dated June 16, 2015, DPR said: “ . . . the Minister has approved the offer to your company, Oil Prospecting Licence (OPL) number 2003, subject to your payment of the sum of $34 million as Signature Bonus.”

The offer letter added that what was expected to be paid is 50% of the $34million which came to $17 million payable within 90 days that fell within June 4th and September 4th 2015.

Indeed, the Oil firm said the acceptance of advanced payment made into a JP Morgan account domiciled in New York, United States by DPR already transferred the OPL 2002 to Hi Rev, which nullifies the non-payment claim by Dr Baru in his letter to President Buhari.

In a swift move to forestall losing the oil field, Hi Rev Oil sued the Minister of Petroleum Resources and Attorney General of the Federation at the Abuja judicial division of the Federal High Court seeking an interlocutory injunction to prevent Federal Government agents from trespassing on the Utapate oil field OML 13 located at Iko community in Eastern Obolo Local Government Area of Akwa Ibom State pending the determination of the substantive suit.

In its submission, the firm argued that its inability to pay the balance of the 50 percent Signature bonus caused restriction placed on spending or transferring dollar for services rendered locally by the Central Bank of Nigeria, CBN, and therefore it should not be blamed for the action. It added that the Department of Petroleum Resources, DPR, also failed to provide a Naira domiciled account where the Naira equivalent of the balance could be paid into.

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