• Nigeria, Saudi Arabia to partner on refineries
• OPEC considers output cut to stabilise prices
Chineme Okafor and Alex Enumah in Abuja
The presidency said Wednesday that the federal government is investigating multinational giants, including Mobil Oil Producing for allegedly short changing the federation in the payment for the oil blocks they acquired and remittance of taxes.
This came as an Italian expert, Dr Don Hubert, in his analysis of the report on OPL 245, noted that the Malabu deal from onset was designed to short change Nigeria, as the agreement took out areas that were meant to generate revenue for the country.
A senior presidential assistant and Chairman of the Special Panel on Recovery of Public Properties, Mr. Okoi Obono-Obla, said at a press conference in Abuja that the oil giant, Mobil Oil, committed the act in 2009 after it acquired an oil block for $2.5billion but remitted only $600 million into the federation account and is yet to pay the balance of $1.9billion.
Obono-Obla, who spoke at an Anti-Corruption Situation Room on Public Presentation of Expert Analysis of OPL 245, otherwise known as Malabu Oil, yesterday in Abuja, disclosed that apart from Mobil Oil Producing Nigeria, the panel is also investigating a lot of multinational oil companies in Nigeria over their failure to pay taxes to the government.
According to him, “We are also investigating Mobil Oil Producing and that is quite instructive because we are here to deal with the misbehaviors of oil companies in Nigeria, particularly multinational oil companies in Nigeria and Mobil is one of them.
‘’We are investigating Mobil over their failure to remit over $1.9billion to the federation account arising out of the purchase of oil block by Mobil in 2009. The price of that oil block was about $2.5bn and Mobil paid only $600m, so we want to recover the $1.9m that is outstanding.
“We are also investigating a lot of oil companies because of their failure to pay tax, a lot of them don’t pay tax, you can imagine how much they are making and yet a lot of them don’t pay tax; that is a classic example of lawlessness and causing economic adversity to the country.”
Outside the oil companies, Obono-Obla disclosed that the panel is also investigating the bailout funds granted to commercial banks in the country in 2006, expressing shock that the funds, apart from the fact that they were yet to be refunded was misconceived to be a “dash” to the banks.
“If you recall that in 2006 the Central Bank of Nigeria gave out bailout funds to commercial banks to the tune of $7billion. When we got to the CBN to update us whether this fund has been paid back the Central Bank of Nigeria said that in 2006 its Board of Directors met and passed a resolution dashing $7billion to these commercial banks.
‘’You can imagine dashing public money; we are going to recover that money because the commercial banks do not belong to the Nigerian people but to private individuals.”
While describing the Malabu scam as a classic example of abuse of office and economic sabotage by corrupt public officials and their cohorts, Obono-Obla warned that the panel would investigate the issue with a view to ensuring that all those involved are dealt with and that everything stolen is recovered from them.
Explaining the Malabu oil deal investigation findings, Hubert said unlike the 2003 and 2005 sharing formula between Nigeria and oil companies, the 2011 and 2012 Resolution Agreement between Nigeria and ENI/Shell did not take into recognition government’s share of profit oil, which according to him are education tax of 2% and 50% petroleum tax.
He said when these two major aspects are removed from the contract the consequence is a loss of about $4.5billion to the government. According to him, the oil block, going by documents it obtained from Shell and ENI, is projected to produce around 560m barrels within its expected 13 years life span when it comes on stream in 2022.
Hubert noted that Nigeria’s loss could be more since the firm did not include the value of gas expected to be produced from the oil block. He, however, noted that Nigeria can revoke the OPL 245 Licence granted Malabu/Shell/ENI or the government through the NNPC pay for the share for the government to get profit oil from the contract.
On his part, the Chairman HEDA Resource Centre, Mr. Olarenwaju Suraju, urged the government to revoke the OPL 245 License so as to save Nigeria loss of the revenue, while calling for the prosecution of all those involved in the shady deal to serve as deterrent to others.
OPEC Considers Output Cut to Stabilise Prices
In a related development, member countries of the Organisation of Petroleum Exporting Countries (OPEC) and their allies led by the Russian Federation may cut their production levels to restore stability in the global oil market prices, which have reportedly dropped by about 30 per cent recently.
If this happens at their next meeting in December, the cartel and its allies would have effectively ignored recent calls by the US President, Donald Trump, for them to bring down oil prices.
Reports indicated that as at the close of business yesterday, Brent crude benchmark traded at $60.61 per barrel from an average of $76.73 per barrel in October.
But the cartel, according to the Energy Minister of Saudi Arabia, Khalid Al-Falih, would do what is necessary to ensure that the growing oil inventories in the market are kept at levels that are comfortable and would not distort the market.
Al-Falih, was guest to the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, in Abuja yesterday, where they both talked extensively on the need to continue to work together to stabilise the oil market.
Both ministers briefed journalists on their conversations as well as the possibility of Nigeria and Saudi Arabia partnering on the business of petroleum products refining.
He said the cartel had taken note of the growing instability in the market, adding that this had been amplified by geopolitical tensions and speculative activities by financial investors.
According to the Saudi oil minister, when producers gather on December 6, in Vienna, Austria, they will, “do the right thing in stabilising the market and giving producers and consumers comfort,” that the oil market will be stable in 2019. In response to questions on his thoughts about Trump’s nudging of the cartel to keep prices of oil low, Al-Falih, said: “I think I speak for the 25 countries altogether. We saw in the action we decided to take in 2016, great benefits for the entire global producers and consumers because oil market stability is very instrumental essentially to everyone in the market, and we do that by focusing on primarily one parameter which is global inventories.
“We try to be as objective and data-focused as possible, looking only to inventories, whether they are building to levels that will destabilise the market, and shutdown investments.
“As we meet in a week’s time, our focus will once again be on fundamentals of supplies and demand, and inventories and try to bring that back into a level that will assure the market.
“The decision is going to be made essentially on December 7 on what to do, and as I said in Abu Dhabi, we have to do whatever is necessary. As important as Saudi Arabia is, we cannot do it alone, we will not do it alone,” he said.
Whatever decision the cartel and its allies take, he said, it would also be in the interest of American oil producers whom he added, were equally worried about the growing instability in the market.
He was however reluctant to state how much oil may be cut by OPEC and its allies, adding: “Everybody is longing for reaching a decision that will bring stability back to the market, and what that will be is premature to say, but I think people know that instability in the market will not help. We will see the numbers from the technical advisers.”
Speaking in the same vein, Kachikwu, who aligned with most of Al-Falih’s thoughts on what direction the market should go, stated that both countries were committed to seeing the market rebalance to comforting levels.
He also explained that it would be too early for Nigeria to decide on seeking production cut exemptions, but added that the country would commit to whatever decisions the cartel takes.
“There is an absolute resolve from both countries to ensure that as we get to Vienna, whatever action that needs to be taken to stabilise price will be taken. The interest of the whole will guide us in our decision. We are looking forward to Vienna, but not without some trepidation.
“It is too early to determine an exemption, but I will say that Nigeria is very committed to working with OPEC. We’ve always been committed even when we have production cap exemptions. When we get to OPEC, we will make a decision in supporting OPEC,” Kachikwu assured.
Both ministers equally disclosed that they could explore business opportunities in petroleum products refining and downstream operations.
In this regard, Kachikwu explained that Nigeria would like to leverage the expertise of Saudi Arabia in midstream and downstream operations to especially revamp Nigeria’s refineries.
He, however, noted that no concrete agreement has been reached by both countries.
“We are struggling with our refineries and they have a massive refining capacity. We are to collaborate in this area as well. The refineries are very close to my heart. I brought up the experience we have and he shared his own experience. We did discuss that but no formal thing agreed yet. These are usually very strong business decisions,” Kachikwu said.