By Jacinta Moran
February 1 - Nigeria's oil production has risen to about 2.2 million b/d after an amnesty agreement with militants allowed the country to pump more oil, but inadequate funding for joint-venture projects remains an issue, oil minister Rilwanu Lukman was reported as saying January 29.
Lukman said the $5 billion proposed in the 2010 budget for the joint ventures' so-called "cash calls" was not enough to fund proposed projects, adding there was a need to explore alternative sources of financing, Nigeria's Business Day newspaper reported.
The chairman of Nigeria's Senate Committee on Petroleum on January 28 had queried the $5 billion earmarked for joint venture cash calls and accused state-owned Nigerian National Petroleum Corporation of failing to provide details and the breakdown of the proposed spending.
Lee Maeball said the Senate would soon pass a resolution to compel NNPC to provide the required information. "There is an increase in the budget of some of your parastatals [government-controlled units] like the Department of Petroleum Resources and others but we have not seen any justification for spending the public money," Maeball was quoted as saying.
Maeball also reiterated the commitment of the Senate to approve major reforms to the oil and gas sector when it passes Nigeria's Petroleum Industry Bill (PIB), which covers both upstream and downstream operations.
It includes changes to existing production sharing agreements
between the government and international oil companies.
But Maeball urged Lukman to provide details on both the proposed
spending and a policy framework for the development of the local
industry in the 2010 budget proposal.
Industry sources also have warned that the 2010 spending program falls
short if Nigeria is being realistic about expansion of its oil
production.
Meanwhile, negotiations on renewing Shell and Chevron's oil licenses in
Nigeria have reached a critical stage with both firms battling to
conclude talks and have deals signed ahead of the passage of the PIB.
The PIB will affect all Nigeria's existing agreements with western oil
operators who have criticized proposals in the bill that include
measures to ensure the government increases its take from deepwater
projects.
Nigeria in November renewed three of ExxonMobil's shallow-water leases
for a further 20 years with the option to renew again but its rivals
Chevron and Shell are still waiting.
Nigeria's junior oil minister, Odein Ajumogobia, the week ended January
29 said the government remains in talks with Shell and Chevron and
dispelled media reports that negotiations had stalled because of
President Umaru Yar'Adua's absence.
Yar'Adua left Nigeria on November 23 and has since been receiving
treatment in a Saudi Arabia hospital for a heart ailment.
In a statement published in local newspapers, Ajumogobia said the oil
ministry had full authority to issue the licenses once the conditions
for renewal have been met.
Contacted on the talks, a Shell spokeswoman told Platts: "Our position
on the issue remains the same, that is, we expect the formalization of
the renewal of our licenses to be accommodated through continued
dialogue with the authorities."
A Chevron spokesman confirmed the company is continuing discussions on
license renewals with the government. He said the company had worked
very closely with Ajumogobia over the last 12 months and will continue
to "assure that there is full alignment with our efforts."
A source at NNPC said Chevron and Shell should have their license
renewals signed soon. "As far as I know, NNPC has reached a compromise
with Shell and Chevron towards concluding negotiations. Shell and
Chevron should have their oil renewal licenses signed very soon. You
know we finished with ExxonMobil late last year," he said.
An official at the oil ministry attributed the delays to a supremacy
battle between the country's two oil ministers. "It is purely down to
the rivalry between Lukman and Ajumogobia as to who has the right to
approve and sign the oil lease renewals," the Abuja-based official said
January 28.
Under the terms of a memorandum of understanding signed with Yar'Adua
that set out the respective roles of the two oil ministers, Lukman is
shouldered with the responsibility of Nigeria's relations with the joint
ventures and NNPC.
But the official said all matters relating to oil leases and the
Department of Petroleum Resources are supervised by Ajumogobia. "In
fact, his letter of appointment clearly stated this. It was in line with
this responsibility that he signed the renewal of ExxonMobil leases,"
the official said.
According to sources, Lukman has refused to sign the renewal agreement
on ExxonMobil's three licenses but a company spokesman said its deal has
been sealed. "As far as we are concerned, negotiations on our leases
have concluded, renewed and signed late in November," he said. "The
ministry even issued a statement on this."
The three licenses -- OML 67, 68 and 70 -- are producing 580,000 b/d and
were awarded to the company in 1968.
Licenses operated by Shell, Chevron and ExxonMobil for, respectively,
the Bonga, Erha and Agbami deepwater fields, originally expired in
November and December 2008.
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