01 April 2014, Abuja – The Department of Petroleum Resources (DPR) Monday faulted the alleged claims by indigenous oil and gas firm, Oando Plc, that its planned acquisition of the business interests of the United States firm, ConocoPhillips (COP), was being threatened by delays to its consent by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke.
DPR said in Abuja that such claims amounted to deliberate arm-twisting tactics adopted by both parties, Oando Plc and COP, to force the federal government into signing off the $1.55 billion oil assets acquisition deal without due diligence on the transaction.
Director of DPR, George Osahon, told journalists that reports alleging that Alison-Madueke had deliberately refused to consent to the deal were untrue, especially in the light of the processes and the time frame involved in the transaction.
Osahon explained that documents to the oil field transaction were only submitted to the minister two months ago to “rubber stamp” the transaction without the DPR conducting the statutory due diligence on the transaction, after Oando and COP had concluded their negotiations among others.
He noted that the process was patently wrong and a direct affront to the government which was not carried along as expected from both parties.
“The very first documents sent to government were two months ago and that is also by their own admission. So, what we are saying is why are they using arm-twisting tactics?
“We need to be circumspect, there are so many things about the transaction that we have to consider unless the media is saying that two months is too long and we should just sign off the deal, but we are not going to do that otherwise we are going to be talking about sacred cows,” Osahon said while picking holes at claims that the acquisition process had been on for 15 months now.
He further said: “I am shocked that they will allow this to go out. Imagine that their 15 months quest was only submitted to government two months ago. They should please allow us to do our job but by sensationalising the process, there is too much focus on the ridiculous rather than the substance. It is deliberate arm-twisting tactics to get the minister to short-circuit the 15-month process.”
The DPR Director added: “The transaction could not have been subjected to some due diligence based on the fact that they have commenced that transaction but what are we looking at? Do they have the financial muscle, do they have the technical wherewithal to do it and are they in good standing for them to be able to do that?
“The part of it which a lot of people don’t know about is the value of the transaction and I will try to explain that; for instance, if this transaction is supposed to be ordinarily $5 million, what will be the basis of the $5 million; you will look at the reserves on the ground and price it, then you will need to pay for it to come out and all the monies you will pay will be added and when you are going to collect your money from government, you will add what you paid and spent, and everything becomes cost recovery.
“Assuming this value is $5 million and you bought it for $15 million, who is the looser? The transaction itself, is it worth this value or people hurriedly go into it because they want to be the winner, but whether you like it or not, it is the federal government that loses and those are the things that we need to investigate.”
He further queried the rationale behind the alleged tactics, saying: “Why will others be subjected to due diligence and Oando will not be subjected to due diligence, are we talking about sacred cow here? It is like going to an entrance examination and you exempted some people from taking the examination because you think they are going to study.
“Some of the issues in this transaction is that when they are under due diligence, whatever we do, we keep our mouth shut. They are seeking deep offshore blocks but the question is, has the company operated a deep offshore block before? If not, what is required from them to operate it effectively because, if they don’t, government loses, everything is about government losing.
It doesn’t matter how angry we are, we must keep our own part of the bargain.
“Normal transactions in other parts of the world will take at least one year but they started two months ago and they say government is dilly-dallying.
Everybody who is operating in the country is operating on behalf of the federal government and the assets in question belongs to government
‘What COP has is called working interest and that is why acquired data belongs to the government first and foremost.
“They quoted Schedule 1 of the Petroleum Act that says the consent of the minister is required for the sale to go through what they did not indicate is that more often than not, the ministry and DPR are left holding the short stick in the sense that everybody believes that all you need to do is conclude your transaction, take it to the minister for consent but they forget that it says prior consent of the minister is needed.”