Oil blocks 245 and 246 share location, derive their birth from a conscious effort to promote indigenous participation in the upstream oil sector and have been in the news in recent times. That about sums up their similarities.

The rest of their chequered history and the fate of their owners at the hands of the Obasanjo administration can be summed up in one phrase: changing fortunes.

At the inception of the Obasanjo administration in 1999 Chief Dan Etete was on self-exile and his oil block allocation had a question mark on it partly on account of its antecedents, and partly on the failure of the allottee to fully pay for the allocation fee also known as signature bonus. Not surprisingly revocation followed, and much later, litigation, here and abroad.

In contrast, in 1999, General Danjuma was Chief Obasanjo’s chief promoter and kingmaker. His oil block allocation, according to the Christopher Kolade committee, was in order and fully paid for. The General became Chief Obasanjo’s Minister of Defence, confidant and member of his kitchen cabinet. His allocation was intact and seemingly inviolate.

By the time Chief Obasanjo was settling down to his second term in office as an elected President Chief Etete had initiated the process that ensured an out-of-court settlement that paved the way for the restoration of his oil block and fortunes.

On the other hand, General Danjuma having turned down re-appointment as Defence Minister was walking out of government and without realising it, out of favour with the administration he principally mid-wifed. His public condemnation of his friends not-so-subtle plan to elongate his tenure via a third term quest was the last straw.

So it came to pass that General T.Y. Danjuma, professed friend of ex-president Obasanjo and twice his kingmaker, opposed his third term ambition and his request for a second oil mining lease, OML, on a subsisting (till 2008) oil prospecting licence, OPL, was turned down without reason or explanation.

The government that purports to support the Babaginda-era policy of encouraging indigenous participation in our foreigner-dominated oil industry penciled down his rich oil lease for a mini-bid round that had pre-selected foreign (Asian) companies and pro-third term indigenous companies in tow. It was the General’s timely recourse to legal action that put paid, temporarily, to that attempt to rob Nigeria’s Paul to pay foreign Peter.

Perhaps for the sake of those who have not been following this epic legal battle it is best to start from the beginning. Oil prospecting licence, OPL 246, is a deep offshore oil block granted under the Petroleum Act 1969 and in pursuance of an exisiting policy of the Federal Government under which it invited indigenous entrepreneurs to participate in the Nigeria upstream oil industry hitherto the preserve of foreign entities.

This is the indigenus concession programme. Under this policy indigenous companies such as South Atlantic Petroleum Ltd, Sapetro and Malabu were awarded discretionary blocks in the high risk deep offshore. The oil blocks were awarded on “sole risk” basis meaning that if no yield was found the holder could not share any part of the loss with government, but if oil is found the government can invite itself back in.

In returning Chief Dan Etete’s oil block, the Obasanjo government refused to exercise this right but that is exactly what the government did in Sapetro case.

The sole risk partners, Sapetro, and its technical partners had expended 755 million dollars to strike oil. By this so-called “back-in” policy, the Federal Government through NNPC reduced Sapetro’s 60% shareholding to 10% by awarding itself 50%, free of charge and risks. The technical partners retained their 40%.

Not satisfied with this 50% ownership of the 500sq km oil mining license, OML 130, awarded to Sapetro, government informed it that it was not entitled to a second OML and furthermore the area not covered by OML 130 had reverted to government. In so doing government ignored the fact that the oil block allocation was valid till March 2008.

But why would any rational organization wish to re-allocate a block in which it had allocated, itself a 50% interest at no cost. Because it makes no economic or any other sense, people resorted to reading politics into it, especially the fact that General Danjuma, two-time kingmaker of the president was publicly and characteristically single mindedly opposed to the president’s third term ambition.

There may in fact be an economic angle. Before the 2006 mini-bid round where General Danjuma’s OPL 246 was up for grabs, the director of DPR, the government department in charge of petroleum resources, Mr. Tony Chukwueke had awarded the block along with two others to a company, Inc Natural Resources Exploration Ltd, in which a son of a top-presidency boss is said to have substantial interests. In the letter ref DIR/DPR dated 13th March 2006 titled Award of Deep Off Shore Blocks OPLS 217, 252 AND 246, Mr. Chukwueke wrote and I quote: “I refer to our meeting today with your representatives in respect of your participation in the 2006 miniround I am directed to inform you that government has favourably considered your request and has granted your company the Right of 1st refusal on OPL 217, 252 & 246.”

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