The decision by the Buhari administration to revoke six oil bloc licenses granted to five companies has opened a Pandora’s Box of recriminations, amidst cries of double-standards, owing to the discriminatory criteria used to sanction the errant companies. The federal government, through the Department of Petroleum Resources (DPR), announced Thursday it has revoked six oil licenses granted to Pan Ocean Oil Corporation (OML 98); Allied Energy Resources Nigeria, (OML 120 and 121); Express Petroleum and Gas Company (OML 108); Cavendish Petroleum Nigeria (OML 110) and Summit Oil International (OPL 206).
A notice issued to industry operators by the apex regulator of the oil and gas industry explained that the revocation was based on a directive by President Muhammadu Buhari to “recover legacy debts” owed by the companies operating the leases. While one of the licenses is an Oil Prospecting License (OPL) where oil is still being explored, five licenses are Oil Mining Leases (OMLs). However, industry watchers have raised questions why the licenses and leases of some companies who are also heavily indebted to the federal government were not revoked. The standing view is that President Buhari is using oil blocks to dispense political patronage to friends and cronies, especially donors, who bankrolled the president’s 2019 re-election campaign and supported candidates of the ruling All Progressive Congress (APC).
Sources told Huhuonline.com that if the government sincerely wanted to collect debts owed by oil companies, then trading house, Aiteo, which owns and operates the giant OML 29 block in Bayelsa State, which it bought from Shell in 2014, for $2.58 billion, should have been top of the list of delinquent debtors. The sources who elected anonymity for obvious reasons were very vocal in their condemnation of the government’s decision not to include the heaviest debtor, Aiteo, whose founder and CEO, Benedict Peters, was said to have been amongst the biggest donors to Buhari’s re-election campaign and is now cashing in on his investment by getting the DPR to keep his company off the hook
Once Nigeria’s favorite oil baron during the Goodluck Jonathan administration, Benedict Peters is reported to be struggling to rustle together funds to make hefty repayments to creditors, which include the Nigerian government. Sources told Huhuonline.com that Benedict Peters had expressed worry to close confidantes about the possibility of the government revoking his license over OML 29. The oil block, said to be Aiteo’s principal asset, produces between 60,000 and 80,000 bpd, but this is heavily impacted by frequent theft along the Nembe Creek Trunk Line and to a greater extent at the Bonny terminal operated by Shell.
Aiteo’s inability to halt the drainpipe, which has now dragged on for nearly four years, has left its financial backers helpless and restless. Huhuonline.com learnt from DPR sources that out of the $2.58 billion it cost to purchase OML 29 from Shell, Total and ENI, over $1.5 billion is understood to have been lent to Peters by Nigerian banks – Guaranty Trust Bank (GT Bank), First Bank of Nigeria (FBN), Africa Finance Corporation (AFC), Zenith, Skype and Access bank amongst others.
Peters chooses Buhari
While the banks know they have little choice over Aiteo given the colossal sums at stake and the near-impossible task of taking over the oil block, sources at Aiteo told Huhuonline.com that Benedict Peters was having anxious moments how a potential change of regime in Abuja would impact the renewal of his license on OML 29, which expires on July 1, 2019. According to sources, Peters, who had been forced to retreat to Accra, Ghana, when Jonathan and the Peoples Democratic Party (PDP) lost power in 2015; made a strategic decision to back Buhari in the 2019 general election.
Sources close to the Buhari presidential campaign organization told Huhuonline.com that Peters support for Buhari’s re-election, said to have in nine figures, was anchored on a personal commitment from the president to renew his OML 29 license. A source close to Peters confided to Huhuonline.com that Peters reasoned that a new cabinet headed by former vice-president, Atiku Abubakar (PDP) would expectedly renegotiate all oil contracts signed in the last months of Buhari’s presidency; which would have most likely meant delays to the renewal of OML 29 and potentially new taxes.
The Aiteo source admitted that Atiku has a very strong grasp of the workings of the oil & gas industry, given his decades-long involvement in the sector as a principal shareholder of oil logistics firm, Intels, which is still highly active in the ports of the Niger delta region. Intels was founded by Italian businessman Gabriele Volpi, who wants to takeover Oando Plc, after the Securities and Exchange Commission (SEC) ordered the immediate removal of the Group chairman, Wale Tinubu and his deputy, Eyimofe Boyo; and barred them from holding positions in any public company for five years.
With Buhari, it is business as usual
Once Buhari won re-election, Peters got the greenlight from Mordecai Danteni Baba Ladan, head of the Department of Petroleum Resources (DPR) – the agency that would in theory take back OML 29 in the event that Aiteo’s is refused an extension to the permit – that his license would be renewed once Buhari is sworn-in to a second term. Immediately, Peters summoned an emergency meeting of all his creditors, ostensibly to negotiate a new repayment schedule, having defaulted on previous agreements – a development he blames on the collapse of global crude oil prices.
The meeting at Accra’s Marriott Hotel on March 5 featured some thirty representatives from the creditor Nigerian banks that collectively lent Aiteo over $1.5 billion to buy OML 29 in 2014. Shell’s trading arm, which itself lent over $500 million to Aiteo, also dispatched several envoys to the meeting. After failing to honor repayments of part of the capital in December last year, after which a number of the banks sent Aiteo an insistent formal notice, Peters decided to hold a meeting with all of Aiteo creditors at once to work on a new plan to restructure the colossal debt all over again. At the meeting, Peters revealed that the DPR had given him its greenlight for another 20-year period to operate the OML 29 license, much to the relief of those present. But the announcement did not resolve the issue of Aiteo’s default on its colossal debt.
Huhuonline.com learnt from sources who attended the Accra meeting that the exasperated creditors quizzed Peters about how he intended to meet his financial obligations if they agreed to an umpteenth repayment schedule. Although Peters tried to blame Aiteo’s insolvency on falling oil prices, the bankers were not impressed and told him that the real problem was mismanagement and poor performance by the company’s leadership. Huhuonline.com was told by sources in Aiteo that Peters rigid leadership style is a one-man show as he does not easily delegate authority even when he has been unable to handle some of the critical functions central to the company’s core business. Even his brother, Francis Peters, who manages his daily business in Nigeria, is understood to only have a minor role at Aiteo.
Shell calls the shots in Aiteo
Sources also told Huhuonline.com that the creditors took Peters to the cleaners, demanding to know what plans Peters had in place to fight against crude oil theft on the Nembe Creek Trunk Line oil transportation line between OML 29 and the Bonny terminal operated by Shell. The pipeline is thought to be losing up to 30% of production per day to theft. The meeting ended on a high note for Peters after all the banks accepted to engage in talks over a new financial arrangement, even though they were provided little clarifications on the issues they raised.
However, Shell which is owed over $500 million decided to hold Peters feet to the fire, insisting on some radical changes at Aiteo’s top management as a condition sine qua non for the oil major not to pursue its threat to legal action against Aiteo. Aiteo sources told Huhuonline.com that Shell actually imposed a new management team on Aiteo and Peters had no option than to yield to Shell pressure. There was therefore a sense of consternation, when Peters summoned all Aiteo’s top management to Accra one day after meeting with the company’s creditors.
It later emerged that Peters had decided to play to Shell’s tune as the billionaire CEO announced that Aiteo will be making a series of key leadership changes following poor performance. To which end, the company’s managing director Chike Onyejekwe, a former Shell manager, was sent into retirement and replaced by the group’s current vice president Victor Okoronkwo, who was posted by Shell to NLNG. Another senior manager shown the door was the head of operations Emmanuel Ukegbu, previously of Addax Petroleum. Ukegbu was replaced by another former Shell executive, Emmanuel Ogagarue. Aiteo’s new head of production James Iwoh also has a background with the Royal-Dutch oil major.
The role of interim CFO fell to Taiye Eyewuoma, who clocked in experience with Seplat/Schlumberger. The previous man to hold this role, Bruce Burrows, was fired in October after a year of service. Since then Razak Shittu, a United Bank for Africa (UBA) banker with close ties to Peters has been managing Aiteo’s finances on an interim basis as the company does not have a permanent chief financial officer.
The matter of Aiteo’s renewal on OML 29 must be of concern to all Nigerians, including President Buhari if indeed, the President wants to be taken seriously when he talks about waging a relentless war against corruption. The failure to revoke Aiteo’s license over OML 29 is a clear case of double standards by the Buhari administration and one more evidence; if at all any was needed that the fight against corruption is a mere smokescreen to target and harassed the regime’s perceived political opponents.
