House to probe Alison-Madueke, Shell over yet to be sold OML 29

Diezani Alison-Madueke 1


10 July 2014, Abuja – The House of Representatives Wednesday raised a seven-man ad-hoc committee to investigate the roles of the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke and Anglo-Dutch oil firm, Shell Petroleum Development Company (SPDC), over the proposed sale of Oil Mining Lease (OML) 29.

OML 29 is one of the four oil blocks, along with the Nembe Creek Trunkline, that Shell and its partners – Eni and Total – are selling to prospective bidders under the Anglo-Dutch firm’s divestment programme. The other blocks are OMLs 18, 24 and 25.

OML 29, the most prolific of the four blocks, and the Nembe Creek Trunkline, were won by Aiteo/Taleveras, in conjunction with won four other companies in the consortium, having submitted a $2.5 billion bid for the assets.

However, all the bidders are still in negotiations with Shell to conclude payments for the oil leases.
The committee set up by the House will be chaired by Hon. Aminu Suleiman (Kano/APC) while other members of the committee are: Hon. Babatunde Adejare (Lagos/APC), Hon. Irona Alphonsus Gerald (Imo/PDP), Hon. Binta Maigari Bello (Gombe/PDP), Hon. Ismaila Ahmed Gadaka (Yobe/APC), Hon. Umaru Haliru Aliero (Kebbi/PDP) and Hon. Sunday Akpodiogaga Emeyese (Delta/PDP).

Deputy Speaker, Emeka Ihedioha, constituted the panel yesterday following a House resolution last month, which indicated that Shell and other oil majors might have hidden under the cover of waivers usually granted by the petroleum minister to embark on the sale of OML 29 and other oil leases.

The ad-hoc committee is expected to find out the validity of the transaction and report back to the House within two weeks.
The setting up of the committee was the fallout of a motion sponsored by Hon. Irona Alphonsus Gerald on the “inadvertent sale of OML 29 and other OMLs by SPDC and other oil majors”.

Gerald, in lead debate, told lawmakers at the plenary that the outright sale of OML 29 and other lease was in direct contravention of the Petroleum Act and undermined the national interest.

According to the lawmakers, OML 29 was leased to Shell more than 52 years ago and one-half of the area of lease had not been relinquished to the federal government as stipulated under the Petroleum Act.
Item 12(1) of the First Schedule to the Petroleum Act stipulates that ten years after the grant of an oil lease, one-half of the lease shall be relinquished to the federal government.

Meanwhile, a report has identified Nigeria, Mexico, Iraq, Russia and Indonesia as the oil producing nations with the highest crude oil theft in the world.

The report, which appeared on the website, showed that as much as 400,000 barrels of oil a day are stolen (or deferred) in Nigeria, equating to losses of $1.7 billion a month for Africa’s “new largest economy”.

“This represents 7.7 per cent of its GDP vanishing, more than the country spends on education and healthcare. These numbers paint a harsh picture about the inability of the Nigerian government, and the multinational oil companies in the Niger Delta, to do anything about this rampant theft,” the report said.

It added that with oil theft hitting record levels in 2013, the G8 has been reminded of its 2000 pledge to help Nigeria solve this crippling problem. However, as the Global Financial Initiative points out, “stolen Nigerian crude oil is transported on internationally registered vessels, sold to international buyers, processed by international oil refineries and paid for using international bank accounts.”

“With one group of thieves admitting to profits of nearly $7,000 a day from their illicit activities, it will take some doing to stop them.”

In the notoriously secretive government of Mexico’s President Enrique Peña Nieto, it is rare to see a senior official publicly admit that a particular crime is up, said the report.
“Last summer, Carlos Morales, the then head of Pemex’s Exploration and Production subsidiary admitted that fuel theft was growing 30 per cent annually in Mexico, for a total theft of 5,000 to 10,000 barrels per day.
“Given that authorities found 2,614 illegal taps in 2013, including close to 600 in November and December alone – compared to around 1,500 in 2012 — Morales might have underestimated the situation.

“The staggering 1,548 per cent jump in these illicit siphons from 2000 to 2013 has been attributed to powerful drug cartels like the Zetas realising the potential of the black gold being pumped through territory they control.
“Fleets of tankers are now being stolen as they rumble across states like Tamaulipas, where Mexican press report the Zetas and the Gulf Cartel have distribution operations that rival those of Pemex itself,” the report revealed.
In Iraq, even if the attractive claim that the US invasion of Iraq was the biggest oil heist of all time, was set aside, Baghdad has a problem on its hands, the report added.

“Oil smuggling was institutionalised in the days of Saddam Hussein; one US Senate estimate is that the Baath regime pocketed $21.3 billion from the UN Food-for-Oil programme.
“Today, it is difficult to estimate just how much oil is being smuggled out of Iraq, as the country’s metering system is behind by a number of years.

However, there have been substantiated reports of complex networks taking thousands of barrels right from the refineries and selling them illegally to Iran and Syria.
“In the chaos left over by the Iraq war, smugglers and terrorist elements have swooped in.”

Russia’s Vladimir Putin is an ambitious man, pointed out the report. “He is seeking to secure Russia’s energy future through landmark deals with China and Central Asia.”

To meet the export requirements of those deals, he has ordered Russia’s oil producers to reach an annual production of 535 million tons of oil by 2020.
For that to happen, he will have to better secure Transneft’s pipeline network of over 50,000 kilometers.

This past April, Transneft threatened to shut down the oil supply to Ukraine, saying that oil worth $63 million dollars had been stolen from its PrikarpatZapadtrans pipeline system heading to the beleaguered country.

However, Transneft has been facing more serious threats from organised crime in fractious regions like Dagestan where 27,000 tons of oil was stolen in 2009.

The report showed that state of oil smuggling in Indonesia might seem insignificant when compared to Nigeria, at just 2,000-3,000 barrels per day.

“However, the government seems to have only awoken to the issue after a South Sumatra pipeline explosion in October 2012 killed at least eight people, and injured dozens.
“The explosion was caused by one of the hundreds of taps that proliferate in the district of Bayung Lencir alone.
“Since then, Jakarta says it has cracked down but oil firms remain unimpressed. National oil giant PT Pertamina shut down one of its main pipelines, Tempino-Plaju, in July 2013. It reported losses of 17,500 barrels of oil within the first week of the pipeline’s exploration,” it said.



 – This Day
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