The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Mr. Waziri Adio has explained how the Department of Petroleum Resources (DPR) undervalued eight Oil Mining Leases (OMLs) belonging to the Nigerian National Petroleum Corporation (NNPC).
Speaking recently when he visited the Corporate Head Office of THISDAY in Lagos, Adio said DPR valued NNPC’s 55 per cent stake in the eight OMLs at $1.8 billion, while Shell, Total and Agip valued their 45 per cent stake in the eight OMLs at over $2 billion.
According to him, if DPR had used the same valuation, which Shell had used to value their 45 per cent stake, the value of the 55 per cent stake would have been much higher than the $1.8 billion.
As part of the divestment of their onshore assets, Shell, Total and Nigerian Agip Oil Company had divested their 45 per cent stake in OMLs – 4, 26, 30, 34, 38, 40, 41 and 42.
Shell Petroleum Development Company (SPDC) in 2010 opened the floodgates of assets sale by the International Oil Companies (IOCs) when it announced the transfer of its 30 per cent interest in Oil Mining Leases (OMLs) 4, 38 and 41 to Seplat Petroleum Development Company Plc.
Total with 10 per cent and Eni with five per cent subsequently sold their stakes in the three leases to Seplat, thus raising the operator’s equity to 45 per cent.
In 2011, Neconde Energy paid $585 million to Shell, Total and Eni to acquire their 45 per cent stake in OML 42. Shoreline Energy Resources paid $850 million to Shell and its partners for their 45 per cent stake in OML 30; Eland Oil paid $154 million for Shell, Total and Eni’s 45 per cent stake in OML 40; ND Western paid $600 million for OML 34; while First Hydrocarbon Nigeria, partly owned by Afren paid $98 million to acquire Shell’s 30 per cent interest in OML 26.
NNPC retained 55 per cent in the eight OMLs, which it later transferred to its producing arm, the Nigerian Petroleum Development Company (NPDC) between 2010 and 2011 at a cost of $1.8 billion.
“Eight assets that belong to the Federation – eight Oil Mining Leases (OMLs) were valued at $1.8 billion. We believe those assets were undervalued but that is not the point. Out of the $1.8 billion, NPDC paid only $100 million. So, there is an outstanding of $1.7 billion,” Adio explained.
Adio further revealed that even the $100 million part-payment was made after two years, precisely in April 2014, while NPDC continued to enjoy the proceeds from the eight leases, without remitting any money to the government.
NEITI audit also discovered that NNPC assigned four OMLs – 60, 61, 62 and 63 from the Agip joint venture to NPDC in December 2012 but no amount had been paid on these four OMLs as at the conclusion of the 2013 audit, neither was the value of the consideration stated in the deed of assignment.
The reported further noted that the NNPC provided no justification for these transactions except that it was within the powers of the Minister of Petroleum to do so to support NPDC to develop capacity.