Louis Ibah and Uche Usim, Abuja

The Federal Government yesterday, announced the revocation of six oil blocks located in the Niger Delta basin in an effort to recover huge debts owed it by firms operating the affected acreages. 

This comes amid increasing oil theft in the region leading to the loss of trillions of naira, according to a report by Bloomberg.

According to the Department of Petroleum Resources (DPR) which gave the announced, the country could lose more revenue in daily oil production in the months ahead  as indicated in the public notice issued on the cancellation of the operating licences of five Oil Mining Licences (OML) and one Oil Prospecting Licence (OPL) following the failure of operators to pay various taxes and royalties to the government.

The five companies affected include Pan Ocean Oil Corporation (OML 98); Allied Energy Resources Nigeria, (OML 120 and 121); Express Petroleum and Gas Company (OML 108); Cavendish Petroleum Nigeria (OML 110) and Summit Oil

International (OPL 206).

“The revocation was based on a presidential directive to recover legacy debts owed by the companies operating the licences,” the DPR said in a statement.

“The revoked licenses are located in the onshore, shallow and deepwater areas of the Niger Delta basin,” it added.

A recent report by the Nigeria Extractive Industries Transparency Initiative (NEITI), had listed Pan Ocean, Allied Energy among oil companies owing the Nigerian government some royalties since 2016.

The report noted  that despite being in a Joint Venture (JV) arrangement with government, Pan Ocean did not remit royalty to the Federal Government.

Only recently the former Minister of State for Petroleum, Mr. Ibe Kachikwu, hinted the Federal Government recovered about N1.2 trillion in royalty arrears from oil companies operating in the country.

Kachikwu said oil firms yet to remit outstanding royalties to the government at the expiration of the agreed deadline, may have their licences revoked — an action that serves as the ultimate penalty for defaulters.

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It was against that backdrop that the Ministry of Petroleum Resources filed a request to revoke the affected licences which led to the presidential order to recover outstanding payments.

Pan Ocean is owned by Festus Fadeyi, a billionaire businessman, while Allied Energy, which is now known as Erin Energy, has Kase Lawal, founder of Camac Energy, as its chairman.

Express Petroleum, operators of OML 108, is technically managed by Shebah Exploration & Petroleum, a company owned by Bryant Orjiako, chairman of Seplat Petroleum Development Company, while Cavendish Petroleum has Mai Deribe as its chairman.

Summit Oil International, operators of OPL 205, also known as the Otien Field, was co-founded by the late MKO Abiola.

Revocation of licences is the ultimate penalty taken by government against companies that default on royalty payment.

Experts say the Nigerian government, over the years, had not always been keen on  wielding the stick apparently due to insufficient political will.

Nigeria, they argue is perhaps the most lenient administration in Africa with regard to unleashing the full weight of the law on oil acreage rent, especially when it concerns local Exploration and Production companies.

Meanwhile the Bloomberg report showed that between 2014 and 2019, millions of barrels of crude oil were lost to thieves, with as high as 100,000 barrels stolen daily in the last few months.

Commenting on the trend,  Ledum Mitee, a lawyer and human rights activist, said  oil thieves now know they can make money instead of just sabotaging pipelines for political reasons.

“They believe the oil is theirs and the government is the thief. “People now realise that instead of just cutting pipelines to spite the government, they can make money out of it,” Mitee was quoted as saying.

He said the “aggressive royalty recovery” was possible following the launch of new automation processes that track production and shipment of crude oil.