The Federal Government has generated about $2.28 bilion as revenue from the sale of oil blocks in four years.
The revelation came just as a Federal Government team, led by the Director in charge of Petroleum Inspectorate Com-mission, formerly Department of Petroleum Resources (DPR), Mr. Tony Chukwueke, was said to have last week met with Korean authorities, to discuss measures that would be put in place to ensure the realisation of the $6 billion downstream projects commitment made by the Korea government in 2005.
The Nigerian government, through the DPR had in 2005, given out two oil blocks, OPL 323 and OPL 321 to Korean National Oil Corpo-ration (KNOC), following the commitment by the Korean invest in some downstream projects in Nigeria. Specifically, the Koreans had pledged to lay a gas pipeline that would convey gas to the Northern part of the country from the Niger Delta, as well as build a 2000MW of IPP.
A highly placed source told THISDAY that the main purpose of last week�s meeting between Korean authorities and Nigeria representatives, was to ensure that the �Koreans remained committed to delivering the total project including the 2000MW of power within a suitable time� .
It was learnt that already the Korean investors had carried out the feasibility study of the multi-billion dollar project at a cost of about $2billion.
Part of the gas pipeline was said to have been built by the Nigerian National Petroleum Corporation (NNPC), but that the need to reposition the pipeline which will be extended into the Niger Delta, where the source of gas supply is, became necessary in view of the current crisis in the region.
Consequently, the investing entity at the meeting was said to have demanded that it be given an extension of time within which to re-examine the entire project to ascertain how much it is going to cost.
�The DPR Director was in Korea last week to look again at how the parties can make sure that that project is realized. The feasibility study alone has cost them $2million.
�The cost is even going to be beyond the $6billion. What they have done last week was to make sure that the Koreans remain committed to delivering the total project including the 2000MW of power.
�They have asked us for an extension of time within which they will now look at the overall, with the reversed route of the pipeline and how much is going to take. The Director will recommend to the Petroleum Minister, that they be given an extension of time to allow them to reverse the feasibility study and reposition the pipeline in view of the reality that is on ground�, the source said.
However, a breakdown of the revenue generated through the open bidding process exclusively obtained by THISDAY showed that in 2000, when the open competitive bidding for the oil blocks was first introduced, the country realised a total of $222million. The record also showed that $1billion was realised in 2005, while $504million and $502million were realized from oil blocks sales in 2006 and 2007 respectively.
Speaking against the backdrop of criticisms that have since trailed the bidding process, a DPR source argued that those who are opposed to the system are �the traditional players in Nigeria who are not used to open bidding, but are used to government giving them oil blocks and then they, paying government on negotiated bases�.
He maintained that the traditional players (oil producing companies in Nigeria ) backed out of the licensing round following the introduction of competitive bidding.
�They stepped back when we introduced the competitive bidding process. We introduced a production sharing contract, that was mammoth of improvement on the old one that allowed the government to earn royalty from deep waters, eight per cent royalty, that allows the government to have profit from day one of production, this type of improvement could never have been introduced and tested, if we did not invite the new players, because the old ones refused to participate when this type of production sharing contract is in place. And I didn�t blame them because they have had a production sharing contract that allowed them to take nearly all the production in the early years of the production of the field.
He said the DPR was trying to get the Chinese to invest in the Kaduna Refinery, but that when the refinery was sold to Bluestar Consortium, the agency opened up a fresh discussion with the Chinese to build a new refinery in Nigeria. He stated that the Chinese are very eager to make investments in Nigeria, even as he disclosed that the agency is sourcing for proven reserve to give to the China Eximbank, which had made commitment to build a railway line from the west part of Nigeria to the North as well as invest on the Mabilla 1,500MW power project.
�That project requires proven reserve, we as a country have not been able to find this proven reserve, DPR is working very hard to find it, unless we are able to find it, we cannot support that project�, he said.
He disclosed that the production Sharing Contract for the 2007 bid round was yet to be signed as the new government needed to be given time to review the exercise to ascertain that it was properly conducted.
�We have not signed the contract because we have a new government, towards the tail end of the last administration, there were a lot of talks, whether it was not too much in a hurry and so own and so forth and you need to give the new government time and we have explained that to those investors, saying give the government time to get its feet on the ground, the ministers have just been appointed, they have to look at these things to be sure that they were done all right particularly in the face of criticisms that may come in future, before the production sharing contracts are signed�, he said.
He further disclosed that a steering committee has been set up to ensure that all the downstream projects committed were implemented under a suited time table, adding that, in the event that the committee was not satisfied with the implementation of the projects, those blocks will come back to the government.
�So the government is not losing anything, and bear in mind that these are blocks which had been either dormant with a lot of these oil companies, which have not been touched for many years and the government had the bravery to go and get them back and begin to make money for the nation out of them otherwise, they would have been sitting there.
�Now if you look at the case that government has with Shell, that block has not been on production for more than 10 years, it has been there. For it alone, if we did not have the litigation, we would have got $200million dollars just from the sale of those blocks and that would have then brought investments into it and at the time, a commitment to build either a refinery or a petrochemical plant or an IPP�, he also said.