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Wednesday, May 1, 2013

NPDC Responds To Petroleum Minister’s Alleged N59tr Oil Deal


 Honourable Minister of Petroleum Resources (HMPR), Mrs. Diezani Alison-Madueke.



The attention of the Nigerian Petroleum Development Company Limited (NPDC) a wholly owned subsidiary of the Nigerian National Petroleum Corporation (NNPC) has been drawn to publications in which five (5) alleged Oil Communities in Delta State led by Chief Emami Ayiri made spurious and unfounded allegations against the Honourable Minister of Petroleum Resources (HMPR), Mrs. Diezani Alison-Madueke. These allegations , which include the underlisted, are untrue:

1. Deliberate exclusion of indigenous rights to preemption and/ or first refusal on the four oil blocks

2. HMPR allegedly, quietly, improperly and illegally assigned 55% FGN interest to Atlantic Energy Drilling Concepts (AEDC);

3. There was no recourse to due process in the aforementioned transactions;

4. Selection of Atlantic Energy Drilling Concepts (AEDC) not through transparent process;

5. HMPR has pecuniary interest in Atlantic Energy Drilling Concepts (AEDC), hence her approval of the deal;

6. Nigeria would lose four trillion cubic feet of gas asset worth $15.72 trillion.


Allegation No. 1: Deliberate exclusion of indigenous rights to preemption and/ or first refusal on the four oil blocks 
 It is the Petitioner’s (Delta State Oil Producing Communities) contention that being an indigenous body, they have first right of refusal or preemptive right to what they perceive to be the Honorable Minister of Petroleum Resources’ (HMPR) assignment of 55% of the Federal Government of Nigeria’s (FGN) equity in OMLs 26, 30, 34 and 42 to Atlantic Energy Drilling Concepts (AEDC). The fact of the matter is that AEDC was NEVER assigned such equity. The 55% equity interest in those blocks were assigned to NPDC, which is our National Oil Company and is an exploration and production (E&P) subsidiary of NNPC.

In line with the governing provision regulating divestment or transfer of participatory interest in any oil block, the Honorable Minister after due consideration, approved the assignment of NNPC’s interest to NPDC.
Needless to say, the Honorable 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.

Allegation No. 2: HMPR allegedly, quietly, improperly and illegally assigned 55% FGN interest to Atlantic Energy Drilling Concepts 
 At the risk of sounding repetitious, the basic fact of this matter is that International Oil Companies (IOCs), who are partners in the NNPC/SPDC JV, divested their 45% equity interest in the aforementioned OMLs to FHN, NECONDE, ND WESTERN & SHORELINE; whereupon, NNPC also assigned its 55% equity interest in those OMLs to the Nigerian Petroleum Development Company (NPDC), the National Oil Company, a wholly owned NNPC subsidiary.

Thereafter, NPDC entered into a Strategic Alliance Agreement with AEDC, in order to meet its critical funding obligations in the OMLs. These types of funding arrangements have been in existence since the late 1990s.

They are not new to the industry. It is therefore false to say that the FGN’s 55% equity interest and/or any FGN equity interest has been sold to AEDC. There was never such a sale.

 Allegation No. 3: There was no recourse to due process in the aforementioned transactions 
 As indicated earlier, 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. As in all previous funding arrangements such as Modified Carry Arrangements (MCA), Project Financing, etc; NNPC negotiates the most competitive financing terms for itself.

Allegation No. 4: Selection of Atlantic Energy Drilling Concepts not through transparent process 
 This statement is deliberately confusing the transaction undertaken by the Shell Petroleum Development Company (SPDC) Parties which sold their 45% equity interest to FHN, NECONDE, ND WESTERN & SHORELINE as against NNPC’s assignment of its 55% equity to NPDC. Neither NNPC nor its subsidiary NPDC is selling or has sold its equity interest in the four (4) OMLs. As such, there is no need for a bidding process as no government equity interest was sold to any third party, be it local or foreign.

 Allegation No. 5: HMPR has pecuniary interest in Atlantic Energy Drilling Concepts, hence her approval of the deal 
 As part of NNPC policy, a thorough background check was carried out on Atlantic Energy Drilling Concepts, and there is no evidence indicating that the Honourable Minister of Petroleum Resources has any direct or indirect pecuniary interest in the company. This allegation is therefore false, unfounded, and malicious and aimed at defaming the character of the person of the HMPR.

It is expected that in issues as profound as these, the Delta State Oil Producing Communities should undertake a thorough, incisive, comprehensive investigation before making spurious allegations that are intentionally meant to tarnish the image of the Honourable Minister.

Allegation No. 6: Nigeria would lose four trillion cubic feet of gas asset worth $15.72 trillion 
 The quoted reserves of 5 billion barrels corresponding to 60% of NPDC 55% equity is obviously a calculated attempt to mislead the National Assembly and indeed the people of Nigeria as the entire 100% equity of the 4 blocks is not up to 5 billion barrels.

Considering that the transaction at issue is not a sale of assets, it is inconceivable to arrive at any loss, not to mention the $15.72 trillion being propagated.

The revenue accruing from approximately 75% of the total reserves that is due to the Federal Government remains unchanged and has not been eroded. Royalty and tax accruable to the federation account will be paid based on production.

In conclusion, NPDC, as the National Oil Company and a flagship subsidiary of NNPC is always seeking to expand its opportunities in the upstream oil and gas sector. In pursuing this growth strategy, NPDC has adopted funding mechanisms to secure production capacity of 250,000 barrels per day by 2015.
This strategy is essential if the National Oil Company (NOC) is to be a major player in the upstream sector in Nigeria and provide National Energy Security for the Nation. A strong National Oil Company is sine qua non for National Security as practiced by all other oil producing countries.

The support of FGN in ensuring NPDC’s expanded operations by seeking additional asset base and funding outside the normal Government funded Joint Venture (JV) cash call, is therefore an imperative. It is interesting that the laudable actions of the Honourable Minister of Petroleum Resources who has consistently fought to support and grow the National Oil Company, NPDC, against competing interests is being parodied and vilified by certain groups.

These concerted actions have already yielded desired results as NPDC production has grown from 60,000 bbl/day to 138,000 bbl/day. Currently, NPDC is the major gas supplier to the domestic market in the western Niger Delta with over 450 mmscf/day which will further increase to over 550 mmscf/d by the end of 2013. We therefore urge all Nigerians to support the development of our own National Oil Company, to enable it compare with its peers (Petrobras, Saudi Aramco and Petronas) and to allow it compete favourably with other International Oil Companies (IOC).

The Delta State Oil Producing Communities and news media owe a duty to the nation to verify information before going public  

MANAGEMENT



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2 comments:

Alert Naija said...

Mrs. Diezani Alison-Madueke has had a few allegations surrounding her office. She keeps buying property and nobody ever asks for probing of her office. But what would you expect if there is backing from the Ogas at the top?

Orikinla Osinachi said...

Alert Naija,
I am interested in facts. Give me the evidence of the properties she has been acquiring and I promise to publish them on Nigerians Report. But I will not spread rumours without facts.