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[Nightdaytrader]

Nigerian govt to stop award of oil blocs to politicians

October 30th, 2006
FG vows to stop award of oil blocs to politicians

The Federal Government has vowed to continuously discourage the award of oil blocs to politicians and other influential Nigerians who have no track record of oil and gas exploration or who are perceived as cronies of foreign companies.
EJIOFOR ALIKE
Tony Chukwueke, director of the Department of Petroleum Resources (DPR) who made this remark during a workshop in Lagos, said these influential Nigerians, especially politicians parade oil blocs awarded them for sale.

He regretted that many Nigerians have allowed underdeveloped discoveries awarded to them in the past exercises to fallow.

According to him, once an oil bloc is awarded to a Nigerian the next thing he does is to board airplane to look for foreign buyers.

"You see Nigerians, especially the politicians parade oil blocs for sale. They say it is monetisation. You cannot stop it. Before you stop it they will remove you before you even start. But we have to gradually stop it", an angry Chukwueke said.

The DPR boss disclosed that the government discarded the local content policy of allocating a certain percentage of oil blocs to indigenous companies because of re-sale of oil blocs.

"When they were allocated 10 percent, they started selling it and the President said we should stop local content in that way", he said.

He stated that Nigerians earn only five percent of about $12billion spent yearly on exploration and production because they prefer to be mere agents.

According to him, they prefer to be middle-men so as to collect what Nigerians call ‘farm-in fees’ while the actual exploration and production are left in the hands of foreign companies.

Nigerians, he said, are not yet prepared for the oil business of exploration and production as only two percent of these operations are done by Nigerians.

According to him, it is only in agency which accounts for a paltry 2.5 percent of the exploration and production spending that over 60 percent Nigerians operate.

The DPR boss argued that Nigerians are still low down compared to their contemporaries in oil business.

According to him, it took Brazil only six years to increase its local content capacity from 15 percent to 70 percent by the conscious efforts of the government.

He identified the increasing cost of borrowing, to the fact that Nigerians are not used to doing oil and gas business and the Niger Delta challenges as the major problems facing the oil and gas industry.

He lamented that despite that oil and gas are the mainstay of the nation’s economy, the Nigerian banks are not funding exploration and production due to its long term nature.

Chukwueke disclosed that banks would prefer to assist importers and other investors who engage in short-term businesses than funding oil and gas.

He challenged indigenous oil companies to take advantage of the Federal Government’s marginal field programme which had fully taken off.
http://www.businessdayonline.com/?c=52&a=9399