Oil & Gas: House to Probe JV Operations, Contracts Sharing 

The House of representatives has set up an Ad-hoc Committee to investigate all Joint Venture (JV) operations and Production Sharing Contracts (PSCs) in the Oil & Gas sector since 1990 with a view to ascertaining whether or not the capital expenditure, operations, financials and related frameworks are within the ambit of law and report back to the House within eight weeks for further legislative action.

This resolution followed the adoption of a motion on the ‘Need to Investigate the Structure and Accountability of the Joint Venture (JV) Businesses and Production Sharing Contracts (PSC) of the Nigerian National Petroleum Corporation from 1990’ moved by Hon. Sergius Ose Ogun,  Hon. Benjamin O. Kalu, Hon. Sada Soli Jibiya  Hon. Ado Sani Kiri  Hon. Isiaka Ibrahim Oyekunle and Hon. Mark Gbillah at plenary on thursday. 

Hon. Sergius Ose Ogun while presenting the motion noted that section 88 (1) and (2) of the Constitution of the Federal Republic of Nigeria, 1999 empowers the National Assembly to conduct investigations into the activities of any authority executing or  administering laws made by the National Assembly.

Ogun noted that Escravos Gas-to-Liquid (EGTL) Project is a Joint Venture (JV) undertaking by the Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited for the construction  of a 34,000 Barrels Per Day (BPD) of Gas-to-Liquids (GTL) Plant at Escravos, Delta State.

“The total of $1.294 billion was earmarked for the EGTL project in 2001 and by the time the contract was awarded in 2005, the final approved cost rose to $2.941 billion, which was further increased to $8.6 billion as at 31st December 2011, and upon completion in 2014, the total project cost was over $10 billion”

“The ETGL and its JV projects are executed at such huge costs when similar projects in  other jurisdictions like Qatar, which have the same capacity, technology, Engineering Procurement and Construction (EPC) Contractors and even operators cost less than $1.5 billion”

Furthermore, he raised concern that although EGTL projects are basically governed by the Heads of Agreement (HOA), Carry Agreement (CA) and the Venture Agreement (VA) in line with various legal regimes such as Companies and Allied Matters Act (CAMA), Petroleum Profit Tax Act (PPTA), Companies Income  Tax Act (CITA) in principle, there is a breach of the principles involved.

He added that the Bonga field (OML 118), which is owned by the NNPC but contracted to SNEPCO (55%), ExxonMobil (20%), Agip exploration (12.5%), and Total (12.5%) under the Production Sharing Contract (PSC) now seems to be far from being a PSC arrangement as it runs foul to the relevant financial operational laws.

“The Offshore Gas Gathering System (OGGS) which was designed to gather gas from various upstream projects in the Niger Delta region under a PSC and JV arrangement with companies such as SNEPCO, SPDC, NLNG has now become mired in some operational misunderstandings”

“In the brewing misunderstanding, SPDC and SNEPCO allegedly went into certain gas sales and sharing arrangements without the prior knowledge and/or consent of the Federal Government via the NNPC, which has resulted in certain shortfalls in revenue into the federation accounts” ADAPTED FROM THISD

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