Representatives survey Nigeria and IOC joint venture projects since 1990


The House of Representatives on Thursday unveiled plans to investigate the structure and liability of joint venture (JV) ventures between Nigeria and international oil companies (IOCs) between 1990 and present.

To this end, the Chamber decided to create an ad hoc committee to investigate all joint venture (JV) transactions and production sharing contracts (PSC) in the oil and gas sector since 1990 with a view to determining whether the expenditures capital, operations, finance and related frameworks fall under the legislation and Production Sharing Contracts (PSC) of the Nigerian National Petroleum Corporation (NNPC) from 1990 to date.

The resolution was passed following the adoption of a motion co-sponsored by the Hon. Sergius Ose Ogun, Honorable Benjamin Kalu, Honorable Sada Soli Jibiya, Honorable Ado Sani Kiri, Honorable Isiaka Ibrahim and Honorable Mark Gbillah.

In his main debate, Hon Jibiya observed that Article 88 (1 and 2) of the 1999 Constitution authorizes the National Assembly to conduct inquiries into the activities of any authority implementing or administering laws passed by the National Assembly .

“The Chamber also notes that the Escravos Gas-to-Liquid (EGTL) project is a joint venture (JV) between the Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited for the construction of a 34,000 barrel per day (BPD) of Gas-to-Liquids (GTL) plant in Escravos, Delta State.


“The Chamber further notes that a total of $1.294 billion was committed to the EGTL project in 2001 and by the time the contract was awarded in 2005, the final approved cost had risen to $2.941 billion, which still has increased to $8.6 billion as of Dec. 31, 2011, and upon completion in 2014, the total cost of the project exceeded $10 billion.

“The Chamber is concerned that the ETGL and its JV projects are being executed at such enormous costs while similar projects in other jurisdictions like Qatar, which have the same capacity, technology, engineering contractors, procurement and construction (EPC) and even operators cost less than $1.5 billion.

“The Chamber is also concerned that while EGTL projects are primarily governed by Heads of Agreement (HOA), Carrying Agreement (CA) and Risk Agreement (VA) pursuant to various legal regimes such as the Companies and Related Matters Act (CAMA), Petroleum Profit Tax Act (PPTA), Companies Income Tax Act (CITA) in principle, there is violation of the principles involved.

“The Chamber is concerned that the Bonga field (OML 118), owned by NNPC but under contract with SNEPCO (55%), ExxonMobil (20%), Agip exploration (12.5%) and Total (12.5 %) under the Production Sharing Contract (PSC) now seems far from being a PSC agreement as it goes against the relevant financial operational laws;

“The Chamber is also concerned that the Offshore Gas Gathering System (OGGS) which has been designed to collect gas from various upstream projects in the Niger Delta region under a PSC and JV with companies such as SNEPCO, SPDC, NLNG is now mired in some operational misunderstandings.

“The House is troubled that, in the brewing misunderstanding, SPDC and SNEPCO allegedly entered into certain gas sales and sharing agreements without the prior knowledge and/or consent of the federal government through the NNPC, which has resulted in some declines in revenue in the federation. Account.”

The ad hoc committee must report to the House within eight weeks for further legislative action.

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Representatives survey Nigeria and IOC joint venture projects since 1990


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