Reps back Presidency’s directive on stoppage of payment of oil proceeds into Joint Venture accounts

Quiz Chevron over alleged inflated $10.3bn Escravos Gas to Liquid contract

The House of Representatives on Tuesday called for the enforcement of President Muhammadu Buhari’s directive to halt the payment of multi-billion dollar revenue accruing from Joint ventures with International Oil Companies (IOCs) into the Joint venture accounts.

Chairman, Ad-hoc Committee investigating the Joint venture Agreement, Hon. Abubakar Fulata stated this while addressing the management of Nigeria Extractive Industries Transparency Initiative (NEITI), Ogbonnaya Orji.

Hon Fulata said: “Are you aware that Mr President has stopped the payment into the JV since January 2017? Get this information by tomorrow. The information at our disposal is that the president has directed that NNPC should seize to make any payment since 2017. Because of the same malfeasance, you don’t make any contribution into the Federation Account, then you are drawing out again monies generated by other agencies. There is no logic in that. So please cross-check that fact,” he told the NEITI delegation.

He maintained that the “House after gaining many information was not satisfied with the level of compliance with the law as far the operations of the JV and production sharing contract are conducted. You are NEITI, part of your responsibility is to expose corruption in the industry. Are you satisfied with the compliance especially with the law, other operations of JV and production sharing contracts in accordance with our laws?”

Mr Orji who was represented by NEITI’s Director on Technical Services, Mr Dieter Bassi who promised to cross-check the information, however, gave a vivid account of various payments made for assets divested to Nigerian Petroleum Development Company Ltd (NPDC) from Nigerian Agip Oil Company JV.

He observed that NEITI in its reports over the years, recommended that JV operations should be operated as business venture, adding that there are a lot of issues on Cash Calls where the Federation is not paid as at when due but relied on the IOCs to pay the money.

According to him, “in December 2012, NNPC assigned 4 OMLs (60, 61, 62 & 63) to NPDC on the instruction of the Minister of Petroleum Resources.) The OMLs were valued at $2.25 billion. However, NNPC said it renegotiated the value of the assets down to $1.554 billion with DPR in 2017.

“While no consideration was paid at the time of the divestment, NNPC later said it had utilized the proceeds of gas sales from the OMLs (50-63) to pay for the assets.”

On the Cash Calls paid to NPDC by NNPC for divested assets, he disclosed that the sum of $536.922 million was paid as Cash Calls in 2013 (Naira and Dollar) by National Petroleum Investment Management Services (NAPIMS) for OMLs in NAOC JV that had already been assigned to NPDC in December 2012 even though the crude oil lifted by NNPC from the OMLs concerned were paid into the account of NPDC.

He added that “NAPIMS provided evidence of a refund of the sum of $389,057 million by NPDC in 2014 leaving an outstanding balance of $147.864 million. There was however no evidence of any transfer of the refund to the Federation Account. NAPIMS also paid $35,541,000 and N2,420,507,000 as Cash Calls to NPDC in respect of OMLs 26 and 42, which had been transferred to NPDC between September 2010 and April 2011.

“The sum of $35,127,000 was refunded by NPDC into JP Morgan Chase Cash Call Dollar Account in July 2013 for cash calls paid for the period April to November 2011 on OML 42.

“A review of NAPIMS documents indicated that there is an outstanding refund request by NAPIMS on OML 26 $414,000 and $249,272,000) and OML 42 (N2,171,235,000) for the same period.”

The NEITI report however noted that NAPIMS did not provide details of basis for refund computation.

Mr Orji added that the NPDC/DPR reconciliation on NPDC legacy indebtedness to DPR in January 2020 also established that as of December 2019, NPDC has paid to NAPIMS a total of $1,404,337,000 in cash call refunds, while NNPC considered the amount as representing refunds for Cash Calls wrongly paid to NPDC after divestment and part payment for the value of the Shell JV assets previously transferred to NPDC.


While examining the documents signed on the Escravos Gas to Liquid contract signed between Nigeria and Chevron, Hon. Fulata observed that a similar project was executed at the cost of $2 billion in Qatar.

While responding to questions from the lawmakers, Chevron’s Chief Executive Officer, Mr Rick Kennedy, disclosed that Chevron does not have interest in the Qatar project as alleged.

On his part, Chevron’s Director in charge of the Joint Venture, Mr Monday Ovuede, affirmed that similar Escravos Gas to Liquid project was estimated at $1.9 billion in 2005 and to be completed at $2.9 billion.

“I oversee JV operations, the project as envisaged to NNPCL and chevron was estimated by experts, to cost $2.9 billion as at 2005. The EGTL project and Escavos Gas Plant Expansion were required to protect the oil which is being produced from upstream, stop gas flaring and monetize that.

“As of today, all those objectives have been achieved. We all knew that this was very complex technology to be executed in this part of the world and so when project construction started in 2005, coincidently, if you check the records, at that same time, the commodity crisis including that of oil and steel started rising in the market.

“The contract was given out and in the course of executive the contract, the contractors came out and said the prices were increasing. To manage the execution of EGTL, a committee was set in pls so to annually meet, understand the cost, and make adjustments as necessary. The project was approved all the way through the Minister.

“During the course of execution, a number of items occurred that were unforeseen during the time the estimates were made. Firstly, is cost escalation, we carried NNPCL from time to time, the committee at a certain stop attending the venture committee meetings because they said they wanted to reevaluate the total cost of the project. Back in 2010, they requested for value for money audit, something that’s not even contained in the agreement with them but in good date we responded and at that point cumulative spending was over $6 billion.

“At the end of the day, the project was completed at $10.3 billion. With the support of the Senate Committee which probed the matter, NNPCL, Chevron resolved all the issues and the agreement reached at the end of the day was that the over $10 billion was accepted as the true final cost of EGTL.”

While ruling, Hon Fulata directed Chevron management saying: “Write to us and justify why the expenses of that Nigeria is way higher than that of Qatar. Outline the timeline of the venture committee meetings so we can substantiate the reason for the increments.”

Also speaking, Chief Executive Officer of Nigerian National Petroleum Corporation (NNPC) Limited, Dr Mele Kyari assured the Parliament of the company’s resolve to be “accountable to the Nigerian people and the National Assembly.

He said: “We will do everything possible to corporate and provide every data or information that will be required by this Committee in the discharge of its duties. More than anything, we are together in preserving value for our country through all investments we have made over the years and as we continue to make sure this value comes to our country.

“We have no reservations around any data or information that the committee may require for any purpose within the discharge of its duties that it is constitutionally required to perform.

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“Having said this, let me put it on record, Chairman that there is no account that the NNPC operates that is not known to the government and the Accountant General of the Federation.

“We always submit the list of the accounts we operate. We make sure that we have appropriate approvals at all times to establish any account for this company.

“I just want to put this on record. There is no secret account this company holds. There is no account that is not known to the government and there is no account that we are doing out of the jurisdiction that we have over this business. It doesn’t exist.

“Secondly, if there is any information that the accountant general requires, we have two sets of accounts, the accounts operated by the NNPC and also accounts operated by our joint venture partners on our behalf. So, there are two separate sets of accounts. But I don’t which information you are looking for that you do not have.

“Mr Chairman, I can tell you any information you need, I will give you directly. You do not need to go through anyone to get these accounts. We will give you full details of all these accounts. So, I have absolved them of any responsibility. I will give you all the information that you want so that they cannot disclaim. I will give you directly,” Dr Kyari assured.

 


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