FG, IOCs to resume negotiation for 20 year-oil leases renewal

The Federal Government will resume negotiation with Shell, Chevron, Total and Eni (Agip) for the renewal of 20 year oil leases for each of the international oil companies (IOCs) soon, Daily Independent gathered at the weekend.
The newspaper had exclusively reported penultimate Monday, how hope of securing renewal by these oil companies in 2013 was dashed, five years after the expiration of the licenses, noting that the negotiations between government and these four majors have been moved to 2014 after recurrent deadlocks.
A source close to the previous negotiations told our correspondent also at the weekend that the parties are to go back to the negotiation table soon.
“Each of the IOCs you mentioned is meeting separately with the representatives of the government and what we know is that the parties are meeting very soon,” he said.

This came as the government allayed fears in some quarters that the on-going divestments by some of these IOCs are caused by the delay in the renewal talks.
The Nigerian National Petroleum Corporation (NNPC), which had earlier dismissed this insinuation, maintained at the weekend that the recent spate of divestments by some international oil companies (IOCs) from some onshore oil blocks would not lead to crisis in the nation’s oil and gas industry.
The oil majors, with the exception of ExxonMobil, have been in failed negotiations with the government for several years to renew these expired licenses (which is done every 20 years), on many of their onshore and shallow water blocks.
Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke had in May 2012 pledged government’s readiness to renew the licenses in June of same year, but over one year after, the stalemate continue to linger.
“In order to show our commitment to a vibrant upstream sector, we have started the renewal of leases in good faith… renewals with Chevron and Shell are expected to be concluded by June at the latest,” Alison-Madueke said at the signing of license renewal for ExxonMobil in Abuja on May 2012.
The Exxon Mobil’s renewal in February, 2012, was worth trillions of dollars, while that of Shell, Chevron, Total and Eni will also be in the same region.
Further checks showed that this stalemate was occasioned by the government’s inability to pass the controversial Petroleum Industry Bill (PIB) into law in 2013.
“The government does not look optimistic on the renewal of these oil blocks leases before the passage of the Petroleum Industry Bill (PIB) and you are aware that the National Assembly on the other hand does not look optimistic on the passage of the bill.
“Possibility of talks on the renewal in 2013 is very faint and except a miracle happens there is not going to be a further negotiation until New Year 2014,” a source close to the negotiation told our correspondent at the weekend.
“I can tell you that negotiations and meetings have been held on several occasions at several times in Abuja and elsewhere between representatives of government led by the minister of petroleum resources, Diezani Alison-madueke and the representatives of each of the IOCs namely Shell, Chevron, Eni and Total. But they have not been able to come up with a way forward.
“This situation is not good for the business of oil exploration and exploitation and it is the major reason why many are now saying that the licenses might not be renewed until after the passage of the Petroleum Industry Bill (PIB), which is likely to increase royalties and taxes, becomes law,” she noted.
Meanwhile, the Group Managing Director of NNPC, Andrew Yakubu, believes the divestments are not only healthy for Nigeria’s petroleum industry, but would also go a long way to promote effective indigenous participation in core upstream activities.