Ahead of Nigeria’s planned Marginal oil fields bid round, a group of Civil Society Organisations (CSOs) and the media, have asked the federal government to make Beneficial Ownership (BO) disclosure a compulsory part of the bid guidelines.
The call was made on Wednesday during an online workshop on the ‘Urgent Case for Reforms in the Petroleum Industry’ hosted by the Media Initiative on Transparency in Extractive Industries (MITEI), and facilitated by the Facility for Oil Sector Transformation (FOSTER II).
The group noted that there could be no transparency without openness hence the need to promote BO in the planned marginal fields bid round, and indeed all subsequent oil bid rounds in Nigeria.
As there had been instances in Nigeria where serious bidders shunned offers, describing it as a show by government to reward its friends and associates, the groups said inclusion of BO requirements this time around would greatly promote transparency in the process and encourage serious bidders to participate, thereby resulting in higher revenues for government.
According to reports, of the 175 marginal oil field licenses issued by the Nigerian government between 2000 and 2007, only one has been developed into commercial production. This is as a result of the offers being awarded to firms with questionable capacity, as serious bidders refused to participate in the exercise due to transparency concerns.
E360 gathered that previous bid rounds in Nigeria revealed a sharp decline in interest from serious investors (local and foreign) in the country’s marginal oil fields. In 2005, only 57 percent of the oil blocks offered for auction secured at least one bid, the number dropped to 40 percent by 2007.
With Nigeria’s daily oil production declining from about 2.3 million barrels per day (bpd) in 2014 to 1.6m bpd in 2019, and further worsened by the current impact of the Covid-19 on the global oil market, the sector faces a bleak future unless reforms are urgently implemented, key of which is to promote BO disclosure in oil bid rounds.
BO is a principle by the global Extractive Industries Transparency Initiative (EITI) for its member-countries to ensure information about beneficial owners of assets in the extractive industries are disclosed to the public. The initiative is also being promoted by the Open Government Partnership which Nigeria is a signatory to. Nigeria officially unveiled its BO register for the extractive sector in December 2019.
In his presentation at the workshop, Energy expert, Mr Israel Aye, said Nigerians must demand that BO disclosure be included as an intrinsic requirement in the guidelines to be put out for bidders by the Department of Petroleum Resources (DPR). This he said, is the only way to guarantee that only serious investors with capacity and genuine plan to develop the oil fields will be attracted to participate.
Awarding the assets to investors without clear capacity to develop and exploit fields would leave the country with same scenario as is the case with fields awarded between 2000 and 2007 which has neither profited the people or the government, the group warned.
Mr Aye further emphasised the need to expunge the absolute powers to award and revoke oil licenses granted the Minister of Petroleum Resources in the petroleum Act. He blamed the provisions for the scarcity of serious investors in Nigeria’s oil licencing round.