The House of Representatives Thursday joined the Senate to investigate some “shady” oil deals involving the sale of seven oil blocks for N59 trillion by the Ministry of Petroleum Resources to some firms without following due process.
Oil Mining Leases (OMLs) 4, 26, 30, 34, 38, 41 and 42, located in Delta State, were formerly operated by the Shell Petroleum Development Company (SPDC) before they were sold to investors. The entire oil leases are said to hold natural gas reserves valued at $15.72 billion.
The House, which set up an ad hoc committee to investigate the transactions, is to ascertain the level of complicity of the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, the Nigerian National Petroleum Corporation (NNPC), SPDC, Atlantic Energy Drilling Concept Limited and Septa Energy Limited, in the said deals.
Deputy Chairman, House Committee on Media and Public Affairs, Hon. Afam Ogene (APGA/Anambra), had drawn the attention of the House to the controversial transactions in a motion of urgent public importance.
In the lead debate, Ogene observed that some ethnic nationalities in Delta State recently marched on the premises of the National Assembly to protest the alleged fraudulent allocation of the oil blocks to Atlantic Energy Drilling Concept and Septa Energy without recourse to the host communities and land owners.
In sealing the deals, Ogene alleged, there was a deliberate exclusion of indigenous operators from exercising their right of first consideration or refusal.
This situation, he said, was in violation of Sections 3 (1, 2 and 5) of the Nigerian Oil and Gas Content Act and circumvented the need for an open and competitive bidding process.
He disclosed that the federal government would have earned $800 million (N126 trillion) rather than the paltry sum it realised if there had been an open and competitive bidding for the oil blocks as required under Section 16 of the Public Procurement Act, 2007.
“It is worrisome that the entire racket became possible through a mischievous process of hinging the transactions on the 'Strategic Alliance Agreement’, an action which was deliberately designed to circumvent due process and transparency in contravention of Section 3 of the Nigeria Extractive Industry Transparency Initiative (NEITI) Act, 2005, Public Procurement Act and Nigerian Oil and Gas Industry Content Act (No 2), 2010,” he said.
Ogene explained that the probe of the transactions had become necessary because of the constitutional responsibility of the parliament which requires the House to conduct an investigation into the public affairs of any person, authority, ministry or government department for the purpose of exposing corruption, inefficiency or waste in the execution or administration of laws.
About two weeks ago, hundreds of youths from Isoko, Ndokwa, Itsekiri and Urhobo ethnic nationalities in Delta State besieged the gates of the National Assembly in protest against the transactions.
In a protest letter forwarded to the President of the Senate and Speaker of the House of Representatives, the communities said: “We are compelled to bring to the notice of this hallowed chambers the manner and/or mode, upon which the allocation of the oil mining leases were fraudulently allocated by the Minister of Petroleum Resources, the officials of the ministry and the Shell Petroleum Development Company Limited.
“Two days before President Goodluck Jonathan dissolved the Federal Executive Council in 2011, so as to reconstitute it for his new mandate, officials of Nigerian Petroleum Development Company (NPDC) secretly transferred production rights in four large oil blocks – OMLs 26, 30, 34 and 42 – to Mr. Jide Omokore's Atlantic Energy Drilling Concept Limited, a company that neither tendered nor bidded (sic) for the blocks.
“By this deal, 60 per cent of NPDC's stake of these assets is about five billion barrels, which when calculated with the 2013 crude oil benchmark comes to $380 billion or N58.9 trillion. This figure is exclusive of the 4 trillion cubic feet (tcf) of gas assets in the blocks valued at $15.72 trillion.
“The game behind this deal is brought sharply into focus by noting the fact that in OMLs 26, 30, 34 and 42, Mrs. Diezani Alison-Madueke's no-bid approach via the so-called ‘Strategic Alliance Agreement’ fetched the Federation Account an upfront cash payment of little more than $50 million as initial entrance fee from Atlantic Energy, while SPDC’s open and competitive bidding process, though excluding indigenes of the areas, on the other hand, got $1.3 billion from Heritage Oil Plc for its 45 per cent joint beneficiary’s stake in the same block.”
The communities said that the government and people of Nigeria had been short-changed, for instance, by the deal pertaining to OML 30, as the value of the asset divested to Atlantic Energy by NPDC should have been higher by at least $750 million.
“If the open and competitive bidding process mandated by Nigeria's Public Procurement Act had been followed, it should not have been less than $800 million,” the petitioners said.
But as the House prepares to probe the involvement of Atlantic Energy Drilling in the oil blocks sold by Shell, the management of NNPC yesterday announced that production of petrol at its three refineries in Kaduna, Warri and Port Harcourt had reached a combined 10.23 million litres per day.
Briefing journalists in Abuja, the Group Executive Director (GED), Refining and Petrochemicals of the corporation, Anthony Ogbuigwe, stated that the Kaduna Refining and Petrochemical Company was currently running at 65 per cent of installed capacity, Warri Refining and Petrochemical Company – 63 per cent and Port Harcourt Refining and Petrochemical Company – 66 per cent.
Ogbuigwe also revealed that the refineries are currently producing 5.53 million litres of kerosene daily and 8.016 million litres of diesel daily.
“I can tell you with every sense of responsibility that contrary to the news making the rounds, all our refineries are doing very well. The major components and various units of the Fluid Catalytic Cracking Units, (FCCU), Crude Distillation Unit (CDU) and Vacuum Distillation Unit (VDU) of all the refineries are working well.
“In fact, these refineries have been running consistently for over three months now,” Ogbuigwe stated.
He explained that the stability in petroleum products supply to motorists in the country was attributable to the performance of the refineries.
Ogbuigwe maintained that the scheduled turn around maintenance for the refineries was on course, with the Port Harcourt refinery taking delivery of some of the components for its rehabilitation. “I can tell you that five shipments for the TAM PHRC have arrived,” he said.
However, he criticised the growing menace of pipeline vandalism and crude oil theft, stressing that they are a big threat to the nation’s oil and gas industry.
The GED called on all the stakeholders in the petroleum sector and Nigerians to team up with the NNPC in finding a lasting solution to the menace so that the refineries could run without shutting down.