LEKOIL has acquired a participating interest of 17.14% in OPL 310 from Afren Investments Oil and Gas (AIOGNL).
According to industry sources, LEKOIL had through its subsidiary, Mayfair Assets and Trust (Mayfair), acquired a participating interest of 17.14% in OPL 310 from Afren Investments Oil and Gas (AIOGNL), a subsidiary of Afren, consented to by Optimum Petroleum as required under the Joint Operating Agreement (JOA) and Optimum provided its written consent to this arrangement.
Prior to this, Afren held a 40% participating interest in OPL 310.
As consideration for the 17.14% interest transfer, LEKOIL funded the first $50M towards drilling an exploration well and sidetrack that resulted in the significant “Ogo” discovery – one of the largest in the world.
It was further revealed that LEKOIL has spent over $120M to date on OPL 310. Ministerial Consent was applied for the 17.14% interest in 2013; and the Department of Petroleum Resources completed the customary due diligence process in April 2014.
Sometime in 2015, LEKOIL acquired the shares of Afren Investments Oil and Gas Nigeria Limited (AIOGNL) which holds a 22.86% Participating Interest in OPL 310 (post the transfer to Mayfair).
Industry experts confirmed that operator consent was not required for this transaction because it was a purchase by LEKOIL of the company, AIOGNL.
In 2016, DPR began the due process of considering the application for Ministerial consent for the 22.86% Participating Interest.
As part of this process, a due diligence exercise on LEKOIL by the DPR is yet to be scheduled. LEKOIL has continued technical work and secured partnerships to develop assets and shared same with Optimum.
LEKOIL has continued to engage with Optimum and has held 3 technical workshops in 2016 as well as executed a non-binding term-sheet to revise some terms in favor of Optimum.
It was further revealed that DPR had called a meeting between the two parties in prior to issuing the letter conveying the Ministerial consent.
It was gathered that during the meeting, Optimum indicated that it wanted to revise a prior term-sheet with LEKOIL and assign the 22.86% interest (which LEKOIL acquired from Afren) to another partner.
Subsequently, LEKOIL received from DPR the letter of conveyance containing conditions beyond the customary assignment premium.
This prompted LEKOIL to write the Minister expressing its objection to the additional conditions inserted by the DPR.
The Minister however instructed DPR to re-issue the letter of conveyance. Interestingly, DPR has not issued the revised letter of conveyance to LEKOIL in the guise that the Minister did not issue his directive in writing.
In sealing the deal, both parties said they placed the national interest of Nigeria ahead of profit.
Both Optimum and Lekoil are indigenous oil and gas exploration and production companies participating in OPL 310; a Dahomey basin block adjacent to the Lagos shoreline, exploring well and sidetrack that resulted in the significant “Ogo” discovery – one of the largest in the world in 2013 according to Wood Mackenzie.
Post discovery, gross recoverable resources attributable from the Ogo field only are estimated to be 774 mmboe (P50).
With significantly large gas resources OPL 310 is arguably one of the most important discoveries in Nigeria and could be a key component in addressing Nigeria’s long term power need.
The Ogo discovery expands the oil producing potential of the country.
The government as represented by the industry regulator – the Department of Petroleum Resources (DPR) has to be decisive and take decisions based on the facts of the case in a timely manner.
The overall impact of a delayed resolution cannot be over- emphasized.
Potential investors are encouraged by the growth in indigenous participation in the oil industry and celebrate success stories like Optimum and Lekoil.
Where indigenous companies deliver value, they should be applauded and reinforced to grow local technical capacity and make sustainable investments with long – term potential for economic growth.
The earlier the work programme is finalized, the better for Nigeria.
Additional crude production in these times can only have positive effect on the economy.
It will also encourage other indigenous independents to seek opportunities and partnerships that will engender economic development.
