Oil minister under scrutiny: Senate begins probe into N58trillion oil block allocation

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The Senate Committee on Petroleum Upstream has commenced a probe into allegations that the Minister of Petroleum, Mrs. Diezani Allison Madueke illegally transferred  four oil blocks which amounts to the sum of N58.9 trillion to Atlantic Energy Drilling Concept Limited, owned by Mr. Jide Omokore.

The committee, which is headed by Senator Emmanuel Paulker had  issued summons to all stakeholders in the oil sector who are linked with the oil blocks allocation following a protest in the National Assembly last week Thursday by members of the Delta State Oil-Producing Communities, who had petitioned the Committee of both the Senate and the House of Representatives that there was a secret transfer of oil blocks OMLs 26, 30, 34 and 42 to Atlantic Energy and Drilling Concept without due process being followed.

The community also alleged that the proven reserves in the block are five billion barrels valued at USD 380 billion, about N58.9 trillion.

The communities also alleged that the true value of OML 30 would have been USD800 million if the NPDC had carried out competitive bidding but that the said OML 30 fetched the federation the sum of $50 million as initial entrance fee whereas they claimed that Shell received $1.3 billion for its 49 percent for its equity interest in the same block, which they claim as a violation of the Public Procurement Act.

Already, the Senate Committee had written letters summoning the Minister of Petroleum, the Group Managing Director of the Nigerian National Petroleum Corporation(NNPC), Shell Petroleum Development Company (SDPC)  among others over the claims by the community.

The NNPC immediately responded on Tuesday to the enquiries by the committee clearing Mr. Jide Omokore’s Atlantic Energy Drilling Concept Limited, of any wrongdoing and insisting that the strategic Alliance Agreement entered into with the company ensured that the NNPC received funds to finance its 55 % equity interests in the affects oil blocks.

The detailed response from the NNPC which was signed by the Group Managing Director, Mr. Andrew Yakubu indicated that the deal neither violated the Public Procurement Act nor denied government of ownership of the oil blocks.

“The Strategic Alliance Agreement entered into between Nigerian Petroleum Development Company Limited and Atlantic Energy Drilling Concept Limited, was not a divestment of Assets nor transfer of operatorship but simply an alternative funding arrangement in order to meet the Nigerian Petroleum Development Company Limited’s cash call obligations in the affected OMLs,” the NNPC stated.

NNPC further told the Senate committee that contrary to the allegations submitted by the oil producing communities, the Strategic Alliance Agreement does not amount to a bidding process for the allocation of oil blocks and that the Agreement is in furtherance of funding cash call obligations from alternative sources.

The submission listed alternative sources of funding currently being used in the oil sector as including service contracts, production sharing contracts and alternative funding arrangements being used in the Traditional Joint Venture operations.

“It is instructive to note that the Nigerian Petroleum Development Company Limited (NPDC) is still the operator and still owns 55% interest in the OMLs. The company has not divested any of its interests in the OMLs as erroneously alleged by the petitioners.”

The NNPC GMD also stated that contrary to claims that the transaction contravened the Public Procurement Act, the  NNPC through the Strategic Alliance Agreement  gets funding for its equity interests and that the organisation is not involved in any form of procurement of goods and services as envisaged in the Act.

NNPC insisted that the Strategic Alliance Award is only a financial arrangement between the NNPC and Atlantic Energy Drilling Concepts Limited.

“There has been no award of a block during the entire exercise not to talk about discretionary award,” the statement submitted by the NNPC further indicated.

Also, the Nigeria Petroleum Development Company (NPDC) said on Wednesday that the allegations by the Oil Producing communities were unfounded and spurious.

A statement by the management of NPDC indicated that the claim of exclusion by the oil communities was unfounded since the NPDC represents the wider scope of all Nigerians who are the owners of the oil blocks. It also stated that the actions taken by the NNPC on the oil blocks are in accordance with the law.

The statement explained that “in line with the governing provision regulating divestment or transfer of participatory interest in any oil block, the minister, after due consideration, approved the assignment of NNPC’s interest to NPDC.

“Needless to say, the minister’s action is within the scope of her statutory oversight responsibility and in essence for the greater benefit of the nation. We must also point out that NPDC, as a subsidiary of NNPC, is as indigenous as any community can claim to be and represents a much wider scope of indigenous rights than the Delta State Oil Producing Communities.

“The allegation of deliberate exclusion of indigenous rights is in contrast with the established pro-indigenous position of the minister as demonstrated in her administration of the oil and gas sector.”

The NPDC further stated that “there was never any sale of equity involved but merely a transaction between NNPC and its subsidiary, NPDC, in compliance with the provisions of the Joint Operating Agreement (JOA). The transaction at issue was not an acreage allocation exercise neither did it involve the issuance of a prospecting license.”

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