Nigerian Senate Probes Shell over Illegal Renewal of Oil Assets

Nigerian Senate Probes Shell over Illegal Renewal of Oil Assets

Nigerian lawmakers said on Wednesday it will investigate oil company Shell Plc over alleged illegal renewals of oil mining lease (OML) and is seeking a refund of $200 million which it said accrued over the period. The Supreme Court earlier this week denied the oil giant from selling pending the conclusion of cases with host communities over oil spills.

The upper house of parliament said a seven-member committee has been mandated to investigate oil exploration leases granted to Shell’s Nigerian division from 1959 to 1989 and from 1989 to 2019 under a joint venture agreement with Nigerian National Petroleum Corporation.

The Senate said the decision to investigate was following the non-payment of $200 million accruals from Shell’s oil mining lease under its joint venture with NNPC and the illegal renewal of leases by the government’s oil ministry and petroleum regulator.

Oil companies, including Chevron and ExxonMobil, operate in Nigeria through joint ventures with the Nigerian National Petroleum Corporation, NNPC. The Senate said Shell and its joint venture partner NNPC were granted extensions of oil exploration leases by the Ministry of Petroleum outside the law, causing the government to lose fees, taxes, rents and royalties.

Probe: The Senate, on Wednesday at plenary constituted an Ad Hoc Committee to investigate Shell Petroleum Development Company (SPDC) over non-compliance with the Petroleum Act and violation of Joint Venture Agreement entered with the Federal Government.

The Ad Hoc committee was mandated to investigate the Oil Mining Lease granted to SPDC between 1959 to 1989, and 1989 to 2019 under the SPDC and NNPC Joint Venture agreement. The committee, constituted by the Senate President Ahmad Lawan, has Sen. Sabi Abdullahi (APC- Niger) as Chairman.

Other members include  Senators George Thompson Sekibo,(PDP-Rivers) Abdullahi Yahaya, (PDP-Kebbi) Bassey Albert Akpan,(PDP-Akwa Ibom)  Solomon Adeola,(APC-Lagos) Smart Adeyemi(APC-Kogi)  and Aishatu Ahmed. ((APC-Adamawa). Senate demanded a refund of 200 million dollars, any amount short of what was paid by SPDC, including penalties and interests under the lease agreements to the Federal Government.

The resolution was reached after it considered a motion sponsored by Sen. George Sekibo. The motion entitled: “Non-payment of the sum of 200 million dollars accruals from the Oil Mining Lease (OML), by Shell Petroleum Development Company of Nigeria Limited under the SPDC/NNPC Joint Venture Agreement.

 “And, illegal and unlawful renewal of Oil Mining Leases by the Ministry of Petroleum Resources/Department of Petroleum Resources (DPR) contrary to the provision of paragraph 10 of the First Schedule to the Petroleum Act 1969 (now Section 86(1) and 86(6) of the Petroleum Industry Act 2022.”

Sekibo, in his lead debate, noted that the Joint Venture (JV) agreement was in contravention of the provisions of the Petroleum Act 1969, by the defunct Department of Petroleum Resources (DPR) and the Ministry of Petroleum Resources, granted to the SPDC, NNPC a 30-year Oil Mining Lease from 1959 to 1989.

He observed that doing so constituted an illegal extension of the Oil Mining Lease by 10 years in the first instance, instead of the prescribed term of 20 years, without recourse to the provisions of the Petroleum Act 1969 in paragraph 10 of the First Schedule.

He said upon the expiration of the initial Oil Mining Lease in 1989, SPDC and NNPC JV, was granted another 30-year Oil Mining Lease again from 1st July 1989 to 30th June, 2019, by the Ministry of Petroleum and DPR instead of the 20 years lease prescribed by the Petroleum Act.

This, he said, is contrary to paragraph 10 of the First Schedule to the said act. He revealed that in the initial additional 10 years Oil Mining Lease of 1969 to 1989, illegally granted to the SPDC and NNPC JV by the Ministry of Petroleum Resources and DPR, the Federal Government lost from fees, taxes, rents and royalties the sum of 120 million dollars.

He stated that in the second instance of the extra 10 years the Federal Government also lost a further sum of 80 million dollars, amounting to a total of 200 million dollars. He said the loss of 200 million dollars which was equivalent to N83.130 billion, could have been of great value to the economy of the nation.

He expressed worry that the trend of illegal extension of Joint Venture (JV) period from 20 years to 30 years lease period without recourse to the Petroleum Act may have also applied to other Joint Venture agreements with the International Oil Companies (IOCs) and need to be investigated.

He disclosed that a whistle-blower petitioned the EFCC on the need to recover the fund from SPDC for the illegal extensions by the Ministry of Petroleum Resources, DPR and to further investigate all other Joint Venture agreements that involved the aforementioned IOCs. READ: Reps to Investigate Diesel, Cooking Gas Rising Prices

He noted that the power to make laws for the Federation as vested in the National Assembly by the Constitution also encompasses the power to make laws for the promotion of national prosperity and a dynamic self-reliant economy as provided in section 16(1)(a) of the 1999 Constitution of the Federal Republic of Nigeria as amended.

He said the Constitution also give power to the National Assembly to carry out appropriate investigation on the misapplication of the laws enacted by the National Assembly, as provided in Section 88 of the Constitution. #Nigerian Senate Probes Shell over Illegal Renewal of Oil Assets