Farm-In16 May 2019 18:49
Been looking at the likely finance options re the service provider and dropped on some info re the guidelines for farm-ins.
Interesting in that this report also has a bearing I believe on the Agamore case. In particular the Petroleum Act Cap P10 Laws of the Federation of Nigeria 2004 state;
“Without the prior consent of the Minister, the holder of an oil prospecting licence or an oil mining lease shall not assign his licence or lease, or any right, power or interest therein or thereunder.”
There was however no definition of what constitutes 'an interest in an OPL.
Guidelines released in 2014 rectified this with:
'Definition of “interest in a licence or lease” – Paragraph 2.0 of the Guidelines includes the following definition for interest in a licence or lease – “any arrangement such as PSC, PSA, farm-in or farm-out agreement, sale, purchase, mortgage or other business arrangements by which a right, privilege, power, benefit, gain or advantage in a licence, or lease is transferred to or conferred either directly or indirectly on a third party.”
We know that In 2010, Essar Nigeria entered into a “Farm In Agreement” with Agamore. So it can be seen that the whole farm-in transaction is dependent on government consent. We know that they didn't get that (twice) and from what i can gather Essar Nigeria/Agamore should have consulted with the DPR at an early stage when negotiating this sort of agreement. Perhaps this is the legacy issue between Essar Nigeria and the government that we spent a lot of time and energy overcoming.
This report also talks about the governments checks on the suitability of entities and thier experience going back over 3 years. We know that Agamore were only incorporated 9 months or so before this 'farm-in' and nothing is evident about any previous experience they had. We don't even know who they are in terms of individuals if they were relying on 'porting' their experience form another company.
Lastly although these guidelines were issued in 2104 the following is relevant to 2010:
'In the circumstances, our expectation is the DPR will likely treat the Guidelines as applicable to any assignment transactions in respect of which ministerial consent had not been received as at August 11, 2014, notwithstanding that such transaction may have commenced much earlier than the date of the Guidelines.'
https://www.banwo-ighodalo.com/assets/resources/aac4e54777f9d3853f745a62d95153d5.pdf
Sign In
Follow the stocks
