*Shell, Belemaoil end shadow-fighting *Shell retains license but Belemaoil wins maintenance rights *Platform to reopen after Turn-Around-Maintenance *Kula communities win big in the 35,000 pbd oil field
The shadow-fighting and subsequent community crisis leading to the shutdown of the Oil Mining Lease (OML) 25 known as the Kula oil field seems to have come to an end at last. Official and unofficial statements have come from the two oil corporations (Shell Petroleum Development Company, SPDC) and Belemaoil Producing Limited (BPL); thus confirming that the dispute is over, after more than two years.
The truce was announced after a meeting involving SPDC and BPL in Abuja before the Minister of State for Petroleum, Timipre Sylva, who said OML 25 was the biggest matter on his mind when he was made minister few weeks back.
The crisis had led to occupation of the oil platform in Belema community in Akuku-Toru local council area of Rivers State by women protesting alleged neglect and lack of development in the three main communities that own the oil field.
Kula communities are towns washed by waters on their way to the Atlantic Ocean. The major oil-bearing communities include Offoin-Ama, Belema and Ngeje, but the people have poured lamentations over lack of functional primary and secondary schools as well as other amenities such as roads, water, power supply, clinics and security. Some of them pay as high as N3000 by boat to get to Port Harcourt, their state capital.
Where exactly is OML 25
OML 25 is located 50 kilometres southwest of Port Harcourt in the onshore eastern delta and is part of the NNPC/Shell Joint Venture (JV). The block is located on the coastal mangrove swamp and extends slightly offshore. It is intersected by the Santa Barbara and San Bartholomeo rivers, which are large deltaic tidal channels that enter the Gulf of Guinea. The riverine and swamp environment makes operating conditions very difficult. Field facilities are mounted on semi-submerged piled.
Origin of crisis
The emergence of Belemaoil owned by a son of the oil community seemed to up the ante in the industry as far as community development was concerned. Belemaoil acquired OML 55 from Chevron.
OML 25 is located deep in the mangrove, close to offshore, and embedded in a difficult swampy terrain, according to BusinessDay findings as far back as 2017. It was acquired by SPDC in 1980 and was put up for sale in 2014 during Shell’s rash of divestments when they divested in OML 24 and 29.
According to the report, the then Minister had been embroiled in issues involving sake of OML 25 by SPDC until elections of 2015 came and flushed her out of the way. It was after this that the community people begun protests that they said would get to as far as Abuja to the next minister (Ibe Kachikwu) and the Nigerian National Petroleum Company (NNPC).
The whole of that week, the community people led by a retired community health director (ministry of health), Tamunoemi Felix Owen-Jack, blocked the road to Belema town and stopped two SPDC workers who claimed to be there on environmental evaluation survey (EES). They were ordered out of the community to avert breakdown of order, suspected to be spies from Shell.
The youths led by Iselema Ekini marched round the town calling for the oil field to be allocated to Belemaoil or nothing. The community leader, Owen-Jack, said Belema town wanted to taste what Kula and Idama communities where Belemaoil started operations to happen to their own community, too: employment, infrastructure, and empowerment.
All and all, Belemaoil which had 7.7 equity in OML 25 (which was owned by Chevron) felt it was the natural entity to acquire the Kula oil field as SPDC was sure to divest. When this did not happen, Belemaoil seemed disappointed and the community people became angry. The platform was seized for two years. Belemaoil had resolved that if SDPC did not leave by selling OML 25, they would naturally vacate when their license would expire about 2017. To their chagrin, SPDC seemed to want Crestar to take over. The crisis deepened.
Matters came to a head late 2018 when SPDC’s license was renewed by the FG under Kachikwu. The Kula kingpins including Anabs Sara-Igbe seemed very angry, having allegedly got assurances that SPDC would not get renewal of license. Protests began to make Shell look horrible and Belema look very wonderful.
History made in Abuja
On Tuesday, September 17, 2019, however, history was made when Belemaoil and SPDC resolved the dispute. SPDC issued a statement thus: “The Shell Petroleum Development Company of Nigeria Limited, operator of the SPDC Joint Venture, is thankful to all stakeholders for their roles in ensuring an amicable resolution of the issues that led to the shutdown of our oil and gas facilities in Belema on August 11, 2017.”
According to Shell Nigeria spokesman, Bamidele Odugbesan, “SPDC remains committed to the welfare of its host communities in the Niger Delta and also to the socio-economic development of Nigeria. We believe that the resumption of our operations in Belema will provide benefits to the people and revenue to the country.”
As if to confirm that the fight was actually between SPDC and Belemaoil, the minister said: ”For Shell and Belema to have cooperated to ensure that there is closing out of matter that has bedeviled the industry for so long, is great”.
Win-win?
Most persons have descrbed the deal as a ‘win-win’ outcome. This could be true because SPDC has hailed it, Belemaoil CEO, Jack-Rich Tein Jr, has hailed it, the minister has praised it, and silence (showing acceptance) in the communities has greeted the outcome from both lines of divide.
Shell has secured affirmation of its license and has won a moral victory. The company had insisted that laws must be obeyed for the sake of the industry in Nigeria. This seems to have been done.
Belemaoil seems to jubilate more, as sources within said BBL got the right to act as the ‘operator’ by winning what it calls ‘maintenance’ rights. This looks like operational permit. BBL sources said it would be the one to maintain the oil field, hire and fire, award jobs to contractors, etc. For instance, BBL may be the one to confirm the integrity of the oil wells and platform and probably carry out TAM should it be needed.
The communities seem to win bigger deals in a new global memorandum of understanding (GMoU). Already over N1.2Bn may have accried to the Kula people and SPDC may have released N300m into the Cluster Account for a start. More funds would be pumped in from time to time. If SPDC was not given such a big fight by Belemaoil, the win for the community may have been less juicy, many persons said.
The aspect of executing development projects for the communities may be dicey. Belemaoil leaders were said to have wanted to take full control of community development but SPDC may have insisted otherwise. At last, the new formula may be that both companies would jointly develop Kula. This may also be to protect the areas that supported SPDC during the fight.
Resumption of oil?
It was gathered that official declaration of truce would be done at a later date, probably September ending to ensure that both factions in the communities got the message clearly. The CEO of the NNPC may personally be in Kula to state it. Thereafter, peace would return fully and operations would resume.
The OML 25 gushes 35,000 bpd and at average of $55 per barrel, the Kula field would yield $1.9m per day or about N500Bn per year gross. This could be why industry players estimated the loss by April 2019 at N700Bn. The Belema platform is also said to be critical in transporting oil from Bayelsa and some other areas in that section to Bonny export terminal.
Conclusion:
BusinessDay had once called for closing of ranks between SPDC and BBL to resolve the impasse, just as has been done at this moment. This was because it became clear at a point that Belemaoil would never force the FG to revoke the Shell license to avoid humiliating the Govt, Shell, and also sending dangerous signal in the industry. At the same time, it was impossible for SPDC to step into the Kula oilfield and resume operation. The Ogoni scenario was fast building up. The only way out was for negotiations brokered by a very high authority such as the NNPC or Ministry. This happened.
It was also speculated then that reconciliation could lead to Belemaoil benefiting in a possible divestment by SPDC in the Kula oilfield in the near future. This expectation could help oil the wheel of peace between SPDC and BBL if the win-win continued.
SOURCE: businessday.ng