House Reverses Award of Dawes Oilfield to Petralon, Others

Emmanuel Addeh in Abuja

The House of Representatives’ Committee on Public Petitions has reversed the Department of Petroleum Resources (DPR)’s award of Dawes Island marginal field to Petralon 54 Limited and its partners.

Although the DPR was said to have taken the decision on the directive of the Minister of State for Petroleum Resources, the lawmakers stated that the revocation of the licence and re-award to Petralon, was not done in the interest of equity and fair play.

The lawmakers wondered why the DPR punished two members of the JV – Eurafric and Tako and yet rewarded one member (Petralon) for the purported joint failure of the venture after it was cancelled in April 2020 for alleged non-performance.

According to the committee, the three companies should benefit from any re-award of the asset, which it said should be restored to pre-revocation status in the interest of equity and national interest.

It alleged that there was an ulterior motive in re-awarding the licence to Patralon alone, when abinitio, Eurafric and Tako, Petralon were supposed to be punished for the same offence.

DPR reportedly justified the revocation of the field licence on the ground that nothing was done on the field from award of the licence till its revocation, adding that no field development plan was submitted for Dawes Island.

According to the DPR, the decision was in the best interest of the nation, although it failed to explain how the JV members would recover their reported investments of over $50 million on the field prior to the licence revocation.

The regulatory agency argued that the expenses were borne on sole-risk basis and thus a loss to the companies, arguing that the revocation and re-award was done in the nation’s interest and claiming that the decision to award the licence to Petralon alone was based on a 2018 petition from Petralon against Eurafric.

However, the lawmakers stated that none of the parties notified Eurafric of the said petition or requested a defence from the company before acting on it.

The DPR had revoked the licences of 11 marginal field operators for non-performance, including Dawes island marginal field located in OPL2006, Okrika, Rivers State.

But Eurafric Energy Limited argued that being the awardee and having majority equity, it has borne about 75 per cent of all field expenditure of about $35 million from the licence award till when it was revoked.

The company noted that having complained to the highest authorities that a large part of the funding in loans was taken from local banks, plus loss of employment, especially within host communities, President and Minister of Petroleum Resources, President Muhammadu Buhari approved the reinstatement of the revoked licences subject to payment of acceptable signature bonuses.

However, it stated that rather than implement the president’s directive, the minister of state and the DPR awarded the field licences to Patralon 54 Limited alone under what it said were suspicious circumstances, prompting the petition to the lawmakers.

In defending its alleged non-performance, the company stated that it had two force majeure, one spanning seven years from 2004 to sometime in 2011, occasioned by militancy within the field area and seizure of its shuttle vessel, the MT Breakthrough by the Nigerian Navy.

Despite these setbacks, Eurafric and its partners , said they were able to produce some 62,000 bbls of crude oil from the field and were ready for continuous production of crude oil from the field when the licence was revoked in April 2020.

In its ruling, the committee said that since the DPR had admitted the JV relationship between Eurafric, Tako and Petralon, in the interest of peace and harmony, all three parties should benefit from any re-award of the licence.