Another Starcrest/Addax article:
DPR bid rounds suffer criticism
• Thursday, Nov 30, 2006
The ability of Directorate of Petroleum Resources (DPR) to hold free and fair bid rounds has come under attack following the ripples its recent award of Oil Prospecting License (OPL) 291 to Starcrest, an indigenous oil company, has caused in the oil industry.
Oil business analysts had said that DPR had awarded Starcrest the OPL 291 during a recent bid rounds, but that instead of paying the initial 25 per cent and the subsequent 75 per cent of the bid according to the rule of the game, Starcrest could not but hawked and sold 75 per cent interest to Addax Petroleum, a foreign firm.
The Tide learnt that the consideration for awarding the OPL 291 to Starcrest was in keeping with federal government’s local content policy but that trouble started in the process when Starcrest could not pay in line with the rules but sold the interest to Addax Petroleum, yet DPR looked away as if nothing happened.
The Tide further gathered that the development was threatening to erode the confidence of international investors in Nigeria’s oil and gas industry as the investors had started suspecting a foul play in the conduct of the bid rounds.
The analysts said that lack of confidence would have marred the 2005 bid rounds as major multinational oil companies withdrew their bids at the last minute over what they regarded as lack of transparency in the whole exercise.
In the circumstance, the former director of DPR, Mr. Tony Chukwueke had, however, debunked the allegation when he said that the inability of the multinational oil companies to participate in the bid rounds was not their lack of confidence in the exercise but that their hands were full.
A source from DPR noted that, in spite of the former director’s claim, the multinational firms were still casting aspersions on DPR over the conduct of the bid rounds, especially as it affected the right of first refusal of oil blocks, which signified an automatic ownership claim to the blocks, but which the DPR director explained that the rights were given to such companies which indicated interest to develop the downstream projects.
The source remarked that the operators viewed the DPR policy as one that would not preserve justice and equity, and added that the operators saw it as corruption in the oil industry, the allocation of OPL 291 to Starcrest which sold 75 per cent interest to Addax Petroleum for $90 million.
The corruption view was strong because the operators did not understand why DPR allowed Addax to pay $55 million to federal government as signature bonus and $35 million to Starcrest for rendering no service at all, the source hinted.
The Tide gathered that Peter Ogbonna, the Chief Press Secretary to the Minister of Petroleum Resources had however, defended the process as being right when he claimed that his ministry was satisfied with the manner Addax Petroleum acquired the working interest of OPL 291 as it was in accordance with oil industry standard.
