The federal government has approved the handing over of the Atala oilfield, a revoked asset once owned by the Bayelsa state government, to new owners, Halkin Exploration and Production Limited.
This was shown in a letter seen by Nigerian NewsDirect which indicated that the field, Oil Mining Lease (OML) 46, was approved for transfer after the Director, DPR, Mr. Sarki Auwalu, copied a memo to the Minister of Petroleum, Mr Timipre Sylva, notifying him of the directive which had been given a nod by President Muhammadu Buhari.
Tagged, “Application to Assign the Atala Marginal Field (OML 46) to Halkin” with reference to PRES/88/MPR/72, the request was approved by the minister who duly commented to that effect.
The DPR had earlier made known that the revocation of 11 of the 13 marginal fields licences it issued to indigenous oil firms to build capacity and promote the participation of Nigerians in the oil sector.
The licences were originally issued in 2003, revalidated in 2013, and the companies were expected to bring the fields into production in five years, but as of the 2018 deadline, most of the fields, including Atala, remained inactive.
The letter to Sylva revealed that the president had approved the marginal fields be re-awarded on discretionary basis to qualified companies with consideration given to the previous operators of the respective fields subject to the demonstration of technical and financial capacity and payment of applicable Good and Valuable Consideration (GVC).
It noted that “The Honourable Minister of State Petroleum Resources (HMSPR) is respectfully invited to note that Halkin Exploration and Production Limited (Halkin) has expressed its interest in Atala marginal field which is one of the revoked assets.
“Halkin stated that in 2019, the company, through one of its subsidiary companies, received the approval of the board of Bayelsa Oil Company Limited (former operators of Atala field) to farm-in to 41 per cent of the field through the execution of farm-in agreement and field management service agreement with BOCL.
“The company claims to have invested over $60,000,000: 00 to revive the asset in the process. The company further states that the decision to submit an expression of interest on the field was based on the review of an independent audit of the asset’s reserve and Competent Persons report.”
Auwalu added that the department’s assessment of Halkin indicated that the company has the potential to immediately bring the field to production and progress with full development of the asset, including the drilling of more wells and production utilisation of the field’s gas resources.
The director invited the minister to note that the GVC was calculated on a base case of $40/bbl which amounted to $8,087,129.86.
Auwalu stated that it was the DPR’s considered opinion that the asset be re-awarded to Halkin Exploration and Production Limited, subject to the payment of the calculated consideration within 45 calendar days, in line with the President’s approval which was earlier referenced.
“Above is respectfully submitted for the HMSPR’s consideration and further directives please,” Auwalu stressed. The president’s instruction was acted upon by the minister.
The Bayelsa state government had said it would challenge the decision of the federal government to revoke the fields with Governor Douye Diri insisting that he would push for a reversal.
Diri stated that the Bayelsa government holds 40 per cent equity in the oil block along with other investors who operate the field, saying that consultations were ongoing “to correct the error” because Atala field had not been inactive as alleged by the DPR and the petroleum ministry.