- Saraki: Other aspects of bill will be handled by joint c’ttee of both Houses
- FG sues JP Morgan for $875m over Malabu deal
Damilola Oyedele, James Emejo in Abuja and Ejiofor Alike with agency reports
With the passage of the Petroleum Industry Governance Bill (PIGB) by the House of Representatives on Wednesday, the Speaker of the House Hon. Yakubu Dogara thursday urged President Muhammadu Buhari to, as a matter of urgency, sign into law the legislation passed by the National Assembly.
His appeal came on the heels of the passage of the legislation by the Senate last year.
It also came just as Reuters reported yesterday that the federal government has filed a claim against U.S. bank, JP Morgan Chase for more than $875 million over negligence in the transfer of funds from a disputed oil block – Oil Prospecting Lease (OPL) 245 – to Malabu Oil and Gas Limited in 2011.
The Speaker said the new legislation will be transmitted to the president within the next few days, explaining that the Eighth National Assembly had to move on and pass its own version of the bill, following the failure of the executive to present a draft bill to the National Assembly.
In a statement issued by his Special Adviser, Media and Public Affairs, Mr. Turaki Hassan, Dogara described the passage of the PIGB as a historic and landmark achievement by the Eighth National Assembly after it was first introduced to the parliament by late President Umaru Musa Yar’Adua in 2008.
Under the current National Assembly, the Petroleum Industry Bill (PIB), originally submitted by Yar’Adua, and a revised version which was submitted by his predecessor, former President Goodluck Jonathan, was broken up for ease of passage.
The PIGB, which has now been passed by the National Assembly deals strictly with the corporate and governance structures of the petroleum industry, especially as they relate to state-owned operators in the sector.
However, the aspect of the bill that deals with the fiscal and licensing regime for oil and gas players, as well as the host community fund, will be addressed in accompanying legislations.
Failure to legislate on a new fiscal regime for the sector over the years has remained a sticking point for oil multinationals, holding up billions of dollars in investment for the oil industry.
The Speaker said with the passage of the long-awaited bill, the petroleum industry will witness drastic improvement, attract investors and open up the sector as the Nigerian National Petroleum Corporation (NNPC) would be unbundled with the creation of other bodies.
He, however, noted that work will still continue on other aspects of the Petroleum Bill by the National Assembly, in accordance with the Eighth Assembly’s legislative agenda.
Just as Dogara spoke on the legislation, the President of the Senate, Dr. Bukola Saraki, said yesterday that the PIGB was awaiting the assent of the president, following its passage by the House.
Speaking during plenary thursday, Saraki said the passage of the bill, which had been pending for about 10 years, was a great achievement for the Eighth National Assembly.
He congratulated the lawmakers for the feat, saying it was a historic milestone.
Saraki disclosed that the remaining two components of the Petroleum Industry Bill – the host community fund and fiscal bills would be handled by a joint committee of both legislative chambers to avoid the need for a conference committee for the harmisation of the legislation.
“That will help to make sure that we are working with just one document and we are happy for that great development. The other two (components) will be passed,” he said.
Speaking further in a video posted on his Facebook page, Saraki said the passage of the PIGB and its assent into law would help to end the perennial fuel scarcity experienced in Nigeria.
The transcript from the video read: “Yesterday, after nearly two decades of back-and-forth, near-misses and ‘near-passages’, the Eighth National Assembly finally reached a milestone with the passage of the Petroleum Industry Governance Bill — otherwise known as PIGB. This is historic.
“Many of you will recall that in May 2017, the Senate took the first step in this direction, and yesterday, the House of Representatives did the same by passing this Bill that is aimed at modernising the Petroleum Industry and overhauling the entire system – to create a conducive business environment for petroleum industry operations.
“The PIGB will also promote openness and transparency in the industry, by clarifying the rules, processes, and procedures that govern the oil and gas sector. This should eliminate, or at worse, reduce corruption significantly and make the sector more efficient and more productive.
“Most important, with the ongoing fuel scarcity in many parts of the country, Nigerians should know that the PIGB, once it becomes law, will help alleviate those issues that lead to scarcity, such as the limited supply of Premium Motor Spirit (PMS), the poor import planning schedule that leads to fuel importation constraints, the corruption, diversion and smuggling — that lead to artificial scarcity, and the absence of deregulation in the sector.
“This bridge that we have just crossed, is a part of the commitment of the National Assembly to remain focused, committed, and determined to meet your expectations. Let me remind our people that this is another promise made and kept by the Eighth Assembly.
“With this feat, we have demonstrated that we have the will and capacity to deliver on our key promises aimed at rebuilding the national economy and improving the standards of living of our people.
“Many people did not give us any chance when we promised to pass the PIGB. Now, we have scaled this first major hurdle and we promise to pass the remaining related bills like the Petroleum Host Community Bill and Petroleum Industry Fiscal Bill very soon to complete the circle.”
FG Sues JP Morgan
Even as the leadership of the National Assembly was celebrating a major milestone with the passage of the PIGB, the federal government was reported to have filed a claim against JP Morgan Chase for more than $875 million, accusing it of negligence in transferring funds from a disputed 2011 oilfield deal to a company controlled by Nigeria’s former oil minister.
A spokeswoman for JP Morgan, however, dismissed the accusation, yesterday, saying the firm “considers the allegations made in the claim to be unsubstantiated and without merit”.
The suit filed in British courts relates to the purchase of OPL 245, a deep water oilfield, in Nigeria by oil majors, Royal Dutch Shell and Eni in 2011.
At the core of the case is a $1.3 billion payment from Shell and Eni to secure the block that the lawsuit says was deposited into a Nigerian government escrow account managed by JP Morgan.
According to Reuters, the lawsuit said JP Morgan then received a request from finance ministry workers to transfer more than $800 million of the funds to accounts controlled by the previous operator of the block, Malabu Oil and Gas, itself controlled by former oil minister, Dan Etete.
The lawsuit said JP Morgan then transferred the funds to two accounts controlled by Etete, without sufficient due diligence to make sure the money did not leave accounts controlled by the Nigerian government.
Reuters was unable to reach either Etete or Malabu for comment.
The filing seen was made in London in November on behalf of the Federal Republic of Nigeria, and says that JP Morgan acted with gross negligence by allowing the transfer of the money without further checks.
It said JP Morgan should have known that, under Nigerian law, the money should never have been transferred to an outside company.
“If the defendant acted with reasonable care and skill and/or conducted reasonable due diligence it would or should have known or at least suspected … that it was being asked to transfer funds to third parties who were seeking to misappropriate the funds from the claimant and/or that there was a significant risk that this was the case,” the filing said.
Late last year, a Milan judge ruled that Shell and Eni must stand trial in Italy, where Eni is headquartered, for a separate legal case in which Milan prosecutors allege bribes were paid to Etete and others as part of the same oilfield deal, including sums that went to Etete’s Malabu.
Eni, Shell and Etete have repeatedly denied any wrongdoing in relation to that case.
Shell last year said it knew some of its payment to the Nigerian government as part of the deal would go to Malabu “to settle its claim on the block”, but that it was a legal transaction.
There are also ongoing investigations regarding the deal in Nigeria and the Netherlands, where Shell is based.
The licence for the offshore block was awarded to Malabu in 1998 under then-President Sani Abacha, but Shell finalised a deal for the block with the Nigerian government in 2011.
A British court, in a judgment late last year that agreed to return to Nigeria $85 million in frozen funds related to the deal, said that Malabu was controlled by Etete.
Oil Remains Stable
Meanwhile, oil prices were stable thursday, supported by tighter inventories of crude oil as well as militant threats of an attack on Nigeria’s petroleum industry, but the market was weighed down by a reported rise in United States fuel stocks.
Brent crude oil futures were at $69.34, down four cents from their last close. Last Monday, they hit their highest since December 2014 at $70.37 a barrel.
U.S. West Texas Intermediate (WTI) crude oil futures sold at $64.03 a barrel, up six cents from their last settlement.
WTI marked it highest since December 2014 at $64.89 last Tuesday.
Arab News quoted traders as saying that oil markets were generally well supported by supply cuts led by the Organisation of the Petroleum Exporting Countries (OPEC) and Russia, which started to withhold production in January last year and are expected to continue their restraint through 2018.
Despite this, analysts said the recent oil price rally, which has lifted crude oil by around 14 per cent since early December, might be about to run out of steam.
Data from the American Petroleum Institute (API) last Wednesday showed a well-supplied fuel product market, which could mean lower crude oil demand going forward.
U.S. refinery crude oil runs fell by 420,000 barrels per day (bpd) and refined product stocks rose, implying a well-supplied market.
Gasoline stocks rose by 1.8 million barrels while distillate fuels stockpiles, which include diesel and heating oil, climbed by 609,000 barrels, the API data showed.
Refined product supplies in Asia are also healthy, largely thanks to a sharp rise in exports from China.
Despite this, traders said prices were unlikely to fall far due to risks to supply disruptions.
In Nigeria, the militant group Niger Delta Avengers (NDA) threatened to launch attacks on the country’s oil sector in the next few days.
Barely two months after it announced the end of its ceasefire last November, the NDA last Wednesday again warned the federal government to brace up for another round of attacks that it would soon unleash on oil and gas facilities in the country.
The militant group had also stated that with the recent killings across the country, the time was ripe for the restructuring of the country, adding that anybody who was against restructuring was an enemy of the country and particularly an enemy of the NDA.
The NDA had wrecked havoc on Nigerian oil facilities in 2016, which helped to precipitate Nigeria’s plunge into a recession.
Before it declared a ceasefire, the NDA had carried out a wave of attacks on oil facilities in 2016 that disrupted the production of 1 million barrels per day (mbpd) from the country’s output, which was then close to 2.3mbpd.
Apart from the threats by the Niger Delta militants, oil markets were also supported by a drop in available crude oil inventories.
U.S. crude oil inventories fell by 5.1 million barrels in the week ended January 12 to 411.5 million, according to the API.
Official U.S. oil inventory and production data was due yesterday from the Energy Information Administration.