Revoked Asset: FGN Approves Transfer Of Bayelsa Oilfield To New Owners

The federal government of Nigeria has approved the handing over of the Atala oilfield, a revoked asset previously owned by the Bayelsa state government, to the new owners, Halkin Exploration and Production Limited.

A letter to that effect sighted indicates that the field named; Oil Mining Lease (OML) 46, was approved for transfer after the Director of Department For Petroleum Resources (DPR),  Sarki Auwalu, copied a memo to the Minister of Petroleum, Timipre Sylva, notifying him of the directive which had been sanctioned by President Muhammadu Buhari.

Tagged, “Application to Assign the Atala Marginal Field (OML 46) to Halkin” with reference to PRES/88/MPR/72, the request was approved by the minister who duly commented to that effect.

The DPR had earlier announced the revocation of 11 of the 13 marginal fields licences it issued to indigenous oil firms to build capacity and promote the participation of Nigerians in the oil sector.

The licenses were originally issued in 2003, revalidated in 2013, and the companies were expected to bring the fields into production in five years, but as of the 2018 deadline, most of the fields, including Atala, remained inactive.

The letter to Sylva showed that the president had approved that the marginal fields be re-awarded on discretionary basis to qualified companies with consideration given to the previous operators of the respective fields subject to the demonstration of technical and financial capacity and payment of applicable Good and Valuable Consideration (GVC).

“The Honourable Minister of State Petroleum Resources is respectfully invited to note that Halkin Exploration and Production Limited (Halkin) has expressed its interest in Atala marginal field which is one of the revoked assets.

“Halkin stated that in 2019, the company, through one of its subsidiary companies, received the approval of the board of Bayelsa Oil Company Limited (former operators of Atala field) to farm-in to 41 per cent of the field through the execution of farm-in agreement and field management service agreement with BOCL.

“The company claims to have invested over $60m to revive the asset in the process. The company further states that the decision to submit an expression of interest on the field was based on the review of an independent audit of the asset’s reserve and Competent Persons report,” it noted.

Auwalu added that the department’s assessment of Halkin indicated that the company has the potential to immediately bring the field to production and progress with full development of the asset, including the drilling of more wells and production utilisation of the field’s gas resources.

The director invited the minister to note that the GVC was calculated on a base case of $40/bbl which amounted to $8,087,129.86.

The Bayelsa state government had said it would challenge the decision of the federal government to revoke the fields with Governor Douye Diri insisting that he would push for a reversal.

Diri said the Bayelsa government holds 40 per cent equity in the oil block along with other investors who operate the field, noting that consultations were ongoing “to correct the error” because Atala field had not been inactive as alleged by the DPR and the petroleum ministry.

*culled from Thisday


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