Awarding oil blocks to political allies creates rooms for idle blocks—Bala Zaka
Leading oil and gas analyst and Petroleum Engineer, Dr Bala Zaka has opened up on the reasons behind growing number of idle oil blocks within the nation’s oil producing regions at a time oil prices are going up and Nigeria is in need of export earnings.
Currently, latest data obtained from the Department of Petroleum Resources have shown that out of 390 oil blocks in the country, 211 are yet to be allocated by the Federal Government.
Besides, some of the allocated blocks are not being drilled due to the inability of the awardees to ramp up the required financial and technical muscles to drive the investment.
The DPR further revealed that 179 blocks have been allocated as of December 2017, comprising 111 Oil Mining Leases and 68 Oil Prospecting Licences while several blocks are awaiting allocation via bidding process which the presidency is yet to give a clear signal on how they will Business Hilights gathered that Nigeria has seven basins, namely Anambra, Benin, Benue, Bida, Chad, Niger Delta and Sokoto.
In Anambra, 12 out of 19 blocks have not been allocated; in Benin, 39 out of 50 are open; in Benue, 41 out of 43 are still idle, while none of the 17 blocks in Bida has been allocated.
In Chad basin, 40 out of 46 blocks are open; in the oil-rich Niger Delta, 34 out of 187 blocks are still idle, while Sokoto’s 28 blocks remain unallocated.
However, in an interview with Dr Zaka, he noted that all unallocated blocks should be awarded to serious-minded investors, “instead of allocating blocks to individuals who eventually will not have the financial muscle.”
He argued that allocating blocks to political allies will only get the nation poorer as politicians do not have the requisite technical expertise to drive the exploration, decrying that “At the end, they (the individuals) farm it out or try to look for partners, which they cannot get. For individuals to be given blocks, they must prove beyond a reasonable doubt that they have technical and financial competence.
“When you have a consortium of some financial institutions, technocrats and businessmen coming together and bidding for a block, they are likely going to sustain that block and do everything to keep it moving.”
“I would rather support us giving few blocks to investors who have the financial, professional and technical capabilities than giving so many blocks to people who will just keep them lying fallow.”
According to him, “Many OPLs had not been able to get to the point of being converted to OMLs because of the high level of capital required.
“An OPL gives its holder the exclusive right to explore for and develop oil and gas within a defined area while an OML gives its holder the exclusive right to explore for, develop and produce oil and gas within a defined area.
“To apply for an OML, an OPL licence holder will have found oil in commercial quantities and satisfied all the conditions attached to the OPL.
Continuing, Zaka averred that “If you end up not finding oil in commercial quantities after prospecting, all the losses will be incurred by you. That is why we keep advising that people should not just go into the oil and gas business without having some simple education.
“By the time they now understand what it takes, they are stuck in the middle of the road; they can’t return the blocks to the government to collect their money back and they did not find people to partner with, and so they will leave the blocks fallow. That is exactly what is happening,” Dr Bala Zaka added.
