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In a fresh move likely to raise eyebrows and widen the gulf between the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, and the House of Representatives, the lower legislative chamber has launched an investigation into the role of the minister and Anglo/Dutch multinational, Shell, in the sale of Oil Mining Lease (OML) 29.
The oil asset is one of the four oil blocks being sold by Shell Petroleum Development Company (SPDC), Total and Eni as part of Shell’s plan to dispose of global assets valued at $15 billion by 2015.
An ad hoc committee set up by the House yesterday for the purpose of investigating and establishing the validity of the transaction by Shell, has two weeks to submit its report.
Shell, however, was not the only oil company identified for investigation, as other oil majors were also alleged to have hidden under the cover of waivers allegedly granted by the petroleum minister to embark on the sale of OML 29 and other oil leases.
Shell is divesting its 30 per cent stake, while Total and Eni are set to sell 10 per cent and five per cent respectively in OMLs 18, 24, 25 and 29.
OML 29, the most prolific of the oil blocks, and the Nembe Creek Trunkline were won by Aiteo/Taleveras in conjunction with four other companies that make up the consortium, having submitted a $2.5 billion bid for the assets.
The action of the House was prompted by a motion sponsored by Hon. Irona Alphonsus Gerald on the floor of the chamber yesterday.
According to the lawmakers, OML 29 has been in the custody of Shell for more than 52 years and one-half of the area of lease has not been relinquished to the federal government as stipulated by the Petroleum Act.
They contended that Item 12(1) of the First Schedule in the Petroleum Act stipulates that 10 years after the grant of an oil mining lease, one-half of the lease shall be relinquished to the federal government.
In his lead debate, Gerald therefore noted that the outright sale of OML 29 and other oil leases was in direct contravention of the (Petroleum) Act and undermined the national interest.
He stressed that OML 29 has been in the custody of SPDC for more than 52 years and one-half of the area of the lease had not been relinquished to the federal government as stipulated by the Act.
“Against the stipulation of the Act, the Shell Petroleum Development Company, in direct contravention of the Petroleum Act, is selling OML 29 and other oil leases, thereby undermining the national interest,” he said.
He expressed concern that SPDC and other oil majors might have hidden under the cover of waivers usually granted by the Minister of Petroleum Resources to embark on the sale of the blocks.
Shell had stated that it would consult with its international and Nigerian partners over the future of the 28 leases that produce some 750,000 barrels of oil per day.
The oil giant has divested its interest in eight oil assets – OMLs 4, 38, 41, 26, 30, 34, 40 and 42 for a total of $1.8 billion, since 2010.
Last June, the oil major announced plans to sell four more onshore oil blocks in Nigeria.
Apart from the Aiteo/Taleveras group that clinched OML 29 in the current divestment programme, Midwestern Oil & Gas Plc/Mart Resources/Suntrust Oil, under the Erotron Consortium, also won the bid for OML 18.
Pan Ocean Oil Corporation Nigeria Limited, operator of the NNPC/Pan Ocean Joint Venture, clinched OML 24.
The winner of OML 25 is not yet clear but Lekoil, Crestar, GreenAcres/CCC/Signet Petroleum, NDPR/SAPETRO and Essar submitted bids for the asset.
Even though the bidders have been informed of their status as preferred bidders, they are yet to pay for the oil blocks, as discussions are still ongoing with Shell on the payment terms.
The oil lease would be transferred to the new owners only after they have met the payment terms and the Nigerian National Petroleum Corporation (NNPC) and the minister give their consent as required under the Joint Operating Agreement (JOA) and Petroleum Act, respectively.
Alison-Madueke stated recently that by the end of this year, the cumulative value of deals that would have been done in the sector within the past 48 months would be around $11.5 billion.
Commenting on the new probe by the House, an industry analyst said it was not clear what the lawmakers had set out to achieve with the probe, as it was apparent during their deliberation yesterday that they were not conversant with the oil asset sales.
He also wondered why only one oil lease – OML 29 – was singled out when there are three other leases currently being sold by Shell and its partners.