A Review of the Nigerian Energy Industry

NNPC writes Senate, clarifies agreement with Atlantic Energy Drilling

NNPC-Towers05 May 2013, Abuja — GROUP Managing Director of Nigeria National Petroleum Corporation, NNPC, Mr. Andrew Yakubu, has described as absurd allegations by Restoration Niger Delta that its agreement with Atlantic Energy Drilling Concept was reached in violation of the Public Procurement Act.

Mr. Yakubu, who wrote both the Senate Committees on Petroleum (Upstream and Downstream), explained that the strategic alliance agreement NNPC had with Atlantic Energy Drilling Concept Limited was not in contravention of the Procurement Act.

In the letters, dated April 30, 2013, addressed to Senator Emmanuel Paulker, Chairman, Senate Committee on Petroleum, Upstream and his Downstream counterpart, Senator Magnus Abe, Mr. Yakubu also explained that the Nigerian Petroleum Development Company Limited, NPDC remained the operator and still owned its 55 per cent interest in Oil Mining Leases, OMLs.

He added that NPDC had not in any way divested any of its interest in the OMLs as alleged by the petitioners.

“We refer to the petition written by Restoration Niger Delta, dated March 4, 2013, in which the petitioners made the following spurious and unfounded allegations against the management of the Nigerian Petroleum Development Company Limited.

“The Strategic Alliance Agreement entered into between Nigerian Petroleum Development Company Limited and Atlantic Energy Drilling Concept Limited was not a divestment of assets or transfer of operatorship but simply an alternative funding agreement in order to meet the Nigerian Petroleum Development Company Limited’s cash call obligations in the affected OMLs.

“Unlike the divestment of the private equity owners’ (Shell Petroleum Development Company Limited, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited equity interest to ND Western Nigeria Limited and Shoreline Nigeria Limited) in which the entire 45 per cent equity interest in the affected OMLs were divested, the Strategic Alliance Agreement simply creates an obligation for Atlantic Energy Drilling Concept Limited to provide funding for the development of these assets as opposed to acquisition of equity interest in the block.

“It is instructive to note that the Nigerian Petroleum Development Company Limited is the operator and still owns its 55 per cent interest in OMLs.

“The company has not divested any of its interest in the OMLs as erroneously alleged by the petitioners. This can be easily discerned from the Strategic Alliance Agreement attached to the petition.

“On whether the execution of the Strategic Alliance Agreement violates the Public Procurement Act, we are very mindful of the objectives of the Bureau for Public Procurement and the scope of application of the Public Procurement Act. We wish to state that the Strategic Alliance Agreement entered into with the Atlantic Energy Drilling Concept Limited does not fall within the purview of the Public Procurement Act.

“The Nigerian Petroleum Development Company Limited is by the Strategic Alliance Agreement receiving funds from Atlantic Energy Drilling Concept Limited to finance its 55 per cent equity interest in the affected OMLs and not the procurement of goods, works or services as contemplated under the Public Procurement Act.

“Therefore, it is absurd to suggest that the Strategic Alliance Agreement is in contravention of the Procurement Act.

“On whether the execution of the Strategic Alliance Agreement amounts to discretionary award of equity interest in OMLs 26, 30, 32 and 42 as alleged by the petitioners, the Strategic Alliance Agreement, it is not an acreage award, neither a divestment as ownership of blocs still remains with the Nigerian Petroleum Development Company, NPDC.

*Henry Umoru, Vanguard

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