• Kachikwu: Buhari has never asked for oil block allocation, contract
• NNPC heading to capital market to fund new projects, says Baru
Ejiofor Alike in Lagos and Chineme Okafor in Abuja with agency reports
The United States authorities have demanded the US arm of Glencore Plc to hand over documents relating to its business in Nigeria, the Democratic Republic of Congo (DRC) and Venezuela.
The Swiss-based commodities trader and miner said yesterday, that it received a subpoena from the US Department of Justice requesting documents and records on compliance with the Foreign Corrupt Practices Act and US money-laundering statutes.
Glencore, a major exporter of Nigerian and Venezuelan crude oil, was among the 50 local and international oil traders that won NNPC’s crude oil lifting contracts that would run from July 1, 2018 to June 2020.
Each of the 50 companies would lift 950,000 barrels of crude oil in the two-year contracts.
The documents requested by the US authorities from the subsidiary Glencore Limited relate to the group’s business in the three countries from 2007 to 2018, Glencore was quoted as saying, adding it was reviewing the subpoena.
The US Foreign Corrupt Practices Act makes it a crime for companies to bribe overseas officials to win business.
Glencore accounts for more than a quarter of the world’s cobalt output, most of it from Congo, which itself is the source of around 60 per cent of global supplies.
Reuters reported that Washington had slammed sanctions on 13 “human rights abusers and corrupt actors” in December last year, including Israeli billionaire, Dan Gertler, who was Glencore’s former partner in the DRC and is a close friend of Congo’s president.
Glencore said last month it had agreed to pay Gertler royalties it still owed in euros instead of US dollars after litigation threats.
In May, Bloomberg reported that Britain’s Serious Fraud Office was investigating Glencore’s activities in the DRC.
Separately, the US Department of Justice has been investigating bribery plots involving payments to Venezuela’s state oil firm, PDVSA and charged five individuals last year.
Washington has also been progressively adding individuals close to Venezuelan President Nicolas Maduro to its sanctions list and has weighed broader penalties to hit the OPEC country’s oil industry.
Glencore’s founder, Marc Rich, was indicted in 1983 for exploiting the US embargo against Iran, tax evasion, fraud and racketeering.
He reportedly fled to Switzerland, where he remained a fugitive pursued by the Department of Justice until he was pardoned by then-president Bill Clinton in 2001.
Kachikwu: Buhari never asked for oil block allocation, contract.
Meanwhile, the Minister of State for Petroleum, Dr. Ibe Kachikwu, has stated that President Muhammadu Buhari has never called him in the last three years to discretionarily allocate oil blocks or contracts to any of his associates.
The minister spoke yesterday as the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, said the corporation would be heading to the capital market to raise more funds to execute new oil and gas projects it had scheduled in 2018 and beyond.
Speaking at the ongoing 2018 edition of the Nigeria Oil and Gas (NOG) Conference and Exhibition in Abuja, Kachikwu said he had been able to undertake several restricting efforts in the country’s oil industry because Buhari had never interfered or tried to influence him negatively.
He equally disclosed that Nigeria’s gas reserves had increased by 7 trillion cubic feet (TCF) to 199TCF, up from 192TCF he said it was previously.
“A lot of work has been done in restructuring of NNPC, started by me, continued by Dr. Baru. Transparency has also been a key pivot led by the President,” the minister said, adding, “One of the reasons why we have done so well is the fact that quite frankly, in my three years of serving as petroleum minister of state, I haven’t received a single call from the president urging me to do an allocation to somebody or give a block to somebody, I have not received such a call.”
He noted that the latest numbers released by the Department of Petroleum Resources (DPR) suggested the country’s oil sector was doing well, although he acknowledged a lot of work were still required to get it to deliver the kind of value that would transform Nigeria’s entire economy.
According to him: “The oil industry is at a very critical stage in its life cycle, and don’t worry about all the nuances you hear about oil going out of stock. The reality even when people point at electric cars, they still represent only two per cent of the instrument of mobility today.
“When we talk of other forces coming to replace oil, the truth remains that oil demands continues to increase. More oil continues to be found by the day.
“In Nigeria, our own numbers as released by the DPR point to figures in excess of 39 billion barrels of oil which will at the current consumption rate last over 50 years.”
“So, there is enough reason to feel that oil will be there for a long time, but the reality is that the performance within the oil sector will differ. It is not how long it lasts, but what value it brings to the populace – the owners of the resource. How we are able to utilise whatever we find.”
Baru, who also spoke at the conference, had stated that the NNPC had signed about $2.5 billion alternative funding arrangements in 2017 to undertake joint venture (JV) projects.
“We plan to be in the capital market to raise more finance for new oil and gas projects such as the NNPC/NAOC JV Idu-Redevelopment; South Gas Project; North Gas Project and Central Gas Project,” he said.
He further stated: “We intend to sanction the multibillion dollar Bonga South West/Aparo (BSWA) project as soon as we conclude an agreement on the heads of terms with SNEPCO on the various pending PSC arbitration disputes. This will jump start the resolution of all the other PSC arbitration disputes.”
Baru also explained that Nigeria’s demand for gas was growing at an unprecedented rate, and that the corporation intended to take advantage of the growth by increasing its gas production.
“In terms of gas production, the domestic demand for gas in Nigeria is unprecedented, with a current daily realistic gas demand of 4,000mmscfd which is expected to grow exponentially to about 7,500mmscfd in the next five years.
“However, within the next three years, with our JV partners, we are committed to increasing natural gas availability from the current 1.5bscf/d to about five billion standard cubic feet per day in 2020.
“Consequently, the government will supply enough gas to generate up to 15GW (15,000 megawatts) of electricity to the power sector by 2020 and stimulate gas-based industrialisation,” he explained.
According to him, development of gas infrastructure and firm supply agreements will continue to be prioritised with the World Bank Partial Risk Guarantee (PRG) expected to remain in place to provide securitisation for gas revenues.
Meanwhile, the Secretary General of the Organisation of Petroleum Exporting Countries (OPEC), Dr. Mohammed Barkindo, has said that high and low oil prices have negative impacts on producer and consumer countries of oil, and as such, the global oil market must continue to strive for a balance in oil prices.
Barkindo, who delivered a paper at the NOG, said both developments affected consumers and producers differently, but that the market eventually ended up a loser.