BREAKING NEWS, Oil & Gas
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The Nigeria Extractive Industries Transparency Initiative says that the Department of Petroleum Resources undervalued oil blocks the Nigerian National Petroleum Corporation sold to its subsidiary, the National Petroleum Development Company
| By Anayo Ezugwu | Jul 11, 2016 @ 01:00 GMT |
THE Nigeria Extractive Industries Transparency Initiative, NEITI, has said that the Department of Petroleum Resources, DPR, undervalued eight Oil Mining Leases, OMLs belonging to the Nigerian National Petroleum Corporation, NNPC. Waziri Adio, executive secretary, NEITI, said in Lagos that the DPR valued NNPC’s 55 percent stake in the eight OMLs at $1.8 billion, while Shell, Total and Agip valued their 45 percent stake in the eight OMLs at more than $2 billion.
According to him, if DPR had used the same valuation, which Shell had used to value their 45 per cent stake, the value of the 55 per cent stake would have been much higher than the $1.8 billion. As part of the divestment of their onshore assets, Shell, Total and Nigerian Agip Oil Company had divested their 45 per cent stake in OMLs – 4, 26, 30, 34, 38, 40, 41 and 42.
Shell Petroleum Development Company, SPDC, in 2010 opened the floodgates of assets sale the international oil companies, IOCs, when it announced the transfer of its 30 percent interest in Oil Mining Leases, OMLs, 4, 38 and 41 to Seplat Petroleum Development Company Plc. Total with 10 percent and Eni with five per cent subsequently sold their stakes in the three leases to Seplat, thus raising the operator’s equity to 45 per cent.
In 2011, Neconde Energy paid $585 million to Shell, Total and Eni to acquire their 45 per cent stake in OML 42. Shoreline Energy Resources paid $850 million to Shell and its partners for their 45 percent stake in OML 30; Eland Oil paid $154 million for Shell, Total and Eni’s 45 percent stake in OML 40; ND Western paid $600 million for OML 34; while First Hydrocarbon Nigeria, partly owned by Afren paid $98 million to acquire Shell’s 30 percent interest in OML 26.
NNPC retained 55 percent in the eight OMLs, which it later transferred to its producing arm, the Nigerian Petroleum Development Company, NPDC, between 2010 and 2011 at a cost of $1.8 billion. “Eight assets that belong to the Federation – eight Oil Mining Leases (OMLs) were valued at $1.8 billion. We believe those assets were undervalued but that is not the point. Out of the $1.8 billion, NPDC paid only $100 million. So, there is an outstanding of $1.7 billion,” he said.
Adio also revealed that even the $100 million part-payment was made after two years, precisely in April 2014, while NPDC continued to enjoy the proceeds from the eight leases, without remitting any money to the government. NEITI audit also discovered that NNPC assigned four OMLs – 60, 61, 62 and 63 from the Agip joint venture to NPDC in December 2012 but no amount had been paid on these four OMLs as at the conclusion of the 2013 audit, neither was the value of the consideration stated in the deed of assignment.
The NNPC provided no justification for these transactions except that it was within the powers of the minister of petroleum to do so to support NPDC to develop capacity.
The NEITI also indicted the NNPC for withholding and short-changing the country of over $13.29 billion in the last nine years. It accused the corporation and its subsidiaries of failing to remit $3.8 billion and N358.3 billion in 2013, and over $12 billion between 2005 and 2009, stating that these outstanding payments were due from unpaid consideration from divested OML cash call refunds, crude oil lifting’s and Nigeria Liquefied Natural Gas, NLNG, dividends over a nine-year period.
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