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Private Refinery: 13 Firms Get Construction Approval DPR Faults House Committee On Oil Block Awards

Posted by By Mike Oduniyi, Gloria Achoyamen and Onyebuchi Ezigbo on 2004/11/25 | Views: 7433 |

Private Refinery: 13 Firms Get Construction Approval DPR Faults House Committee On Oil Block Awards


Thirteen companies have so far received Federal Government approval to commence construction of private refineries, more than two years after they were initially granted preliminary licences.

Thirteen companies have so far received Federal Government approval to commence construction of private refineries, more than two years after they were initially granted preliminary licences.

Director of the Department of Petroleum Resources (DPR), Mr. Mac Ofurhie, who made this known yesterday in Lagos, faulted the report of the House of Representatives Committee on Petroleum Resources concerning the process of awards of oil blocks by the department.

Ofurhie said that the 13 firms, which he did not name, were the ones that met the June 2004 extended deadline to meet guidelines for approval to construct.

"We issued licences to 18 companies two years ago. They were supposed by June this year, to have been ready to start construction. Out of the 18, only about 13 have been issued licence to start construction, that is, the second phase," said Ofurhie.

The remaining five firms, according to the DPR boss, will have to await Federal Government's decision whether to extend the deadline or not.

"There is no indication that we will extend it for now. They are already late. but it could be reconsidered in future," he said.

The Petroleum Resources Ministry had in June 2002 given 18 firms preliminary licences. The companies include Akwa Ibom Refining and Petrochemicals Limited, Tonwei Refinery, Ilaje Refinery and Petrochemicals, NSP Refineries, Oil Services Ltd, and Ode-Aye Refinery Ltd.

Others are Orient Petroleum Resources Ltd and Owena Oil and Gas Ltd., Southwest Refineries and Petrochemicals Company, Starex Petroleum Refinery Ltd, The Chasewood Consortium, Total Support Refineries and Union Atlantic Petroleum Ltd.

The private refineries were to compliment the existing ailing four state-owned refineries, which despite having a combine production capacity of 445,000 barrels per day (bpd), remain unable to meet the nation's petroleum products demand.

Analysts have contended that increasing local production of fuel remained the only solution to the frequent hike in fuel prices.

The DPR chief also yesterday told news men that the House Committee on Petroleum Resources goofed in its report on oil lifitngs, awards of blocks and the release of information on operations of the industry to the National Assembly.

The Committee chairman, Hon. Cairo Ojougbo, had in his report on the outcome of the oversight functions of the committee, stated among others, that the DPR had failed to assist the committee with information and that it discovered an award of oil block to a hairdresser to the wife of a president. Ofurhie challenged Ojougbo to name the hairdresser or the oil block involved. "I can't imagine it. They didn't even name the block. If they stated the block, then we would have been in a position to say yes, this block was given to a woman, whether she is a hairdresser we would probably won't know. "Until we get an idea what block they were referring to, I can't even hazzard a guess," he said. Ofurhie, however, said the purported block might have been awarded under discretionary awards by past military regimes. "But this regime, since 1999 we never had any discretional allocation of blocks. We had one open block bidding that happened in 2000." "One of the major responsibilities of the DPR is the monitoring and supervision of crude oil production and export. It is therefore unimaginable that anyone who has not studied the procedure put in place can question, based on assumptions, the competence of the DPR to monitor crude oil export at the terminals or the processes put in place for same. "When selected members of the House of Representatives Committee on Petroleum Resources visited the Department as part of their oversight responsibilities on Monday, October 18, 2004, we obliged them with all the information demanded and made presentations to them on our mode of operations and the personnel budget performance as at August 2004. "We explained that the Department's personnel cost allocations cover salaries and other personnel allowances, medical expenses, Canteen services, transfer benefits and other sundry expenditures as obtained in the NNPC (Nigeria National Petroleum Corporation). We also submitted all our personnel expenditure profiles from January - August 2004 to the committee as we had done to members of a similar committee from the Senate, who earlier visited for the same exercise," Ofurhie said. In a related development, authorities of the Nigeria-Sao Tome and Principe Joint Development Authority (JDA) yesterday got a directive to begin processes leading to the award of additional oil blocks out of the outstanding eight blocks whose offer for tender was put forward in April 2003. Speaking at the opening of the 8th Joint Ministerial Council (JMC) Meeting yesterday in Abuja, Nigeria's Minister of State for Foreign Affairs, Alhaji Abubakar Tanko said the Authority is being directed to come up with the necessary guidelines for a cost effective and transparent system for the award of more oil blocks in the Joint Development Zone. "Mindful of the fact that licensing only one block will not generate the desired level of activity and revenue to the two governments, the JDA will be directed to come up with necessary guidelines for a cost effective and transparent system for the award of additional blocks for the 2003 Licensing Round", he said. He described the two-day council meeting as very crucial as it would also take a final look at the negotiations of the Production Sharing Contract (PSC) which has been on in the last few months. Other important issues considered by the ministers include matters relating to the smooth running of the JDA and its activities and consideration of the processes for awarding additional oil blocks. The Minister observed that the JDA has in recent times undergone some transformation, apparently referring to the changes which led to the coming on board of more people to the Joint Ministerial Council as well as appointment of a new board for the authority. Tanko expressed confidence that with the calibre of the new members of the JMC and JDA board, they will all work assiduously to actualize the dreams and aspirations of the founding fathers of the project. The leader of the Sao Tome delegation and the country's Minister of Natural Resources and Environment, Engr. Arlindo Carlhvalo, said his team has considered all aspects of the PSC for first oil block in readiness for the final agreement. "We have analyzed issues relating to the final PSC agreement on the first part of the bidding and is creating conditions for the award of more oil blocks from the zone, which is of great importance to us", he said. Nigeria and Sao Tome and Principe signed a treaty on February 21, 2001 to jointly develop and manage the petroleum and natural resources in the JDZ. The signing of the treaty led to the inauguration of the board for the JDA on January 16, 2002 and since then, the JDA has been able to formulate guidelines on the fiscal regimes that would guide oil and gas operations in the zone. The announcement of the American oil company, Chevron-Texaco, as the winner of the operatorship of the first oil block in October 2003 formed part of the high point of the Joint Development agreement.

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