Nigerian Petroleum Development Company, NPDC, has no capacity to manage Nigeria’s oil assets the Nigeria Extractive Industries Transparency Initiative, NEIT has said. The oil watch dog in a statement on its recently released Policy Brief titled ‘Un-remitted funds, oil sector reforms and economic recovery’, urged the Federal Government to revisit and re-evaluate the transfer of the nation’s oil assets by the Nigerian National Petroleum Corporation, NNPC, to the NPDC, its upstream subsidiary.
Executive Secretary of NEITI, Mr. Waziri Adio, said that the review has become imperative in view of the gross under-valuation, non–payment for the assets and the inability of the NPDC to either make returns on the investments or be accountable to the federation over its management of Nigeria’s oil assets in its custody.
Adio maintained that if the NPDC was established to foster indigenous participation in the upstream sector, the Company has not in the past three decades, demonstrated ability to either maximise its production capacity or show that it has the financial muscle to operate independently.
Specifically, it explained that in mid-2006, total output from NPDC’s wholly owned production was just 10,000 barrels per day (bpd), while on the other hand, production from its service contract agreement with Agip was 65,000 bpd.
It argued that despite NPDC’s clear operational and capacity deficiencies, the company continues to be allocated valuable concessions of Nigeria’s most productive Oil Mining Leases, OML.
It said,“The lack of technical know-how has been evident since the mid-2000s when the NPDC started engaging in service contracts with international oil companies.
Also, NPDC’s lack of finances has been evident since the beginning of the 2010s, when the company resorted to Strategic Alliance Agreements (SAAs) with indigenous oil companies to carry out production on the fields in its possession.”
NEITI accused the NPDC of deliberately refusing to be accountable in its management of Nigeria’s oil assets entrusted in its care.
PricewaterhouseCoopers’ (PwC) valuation of the same assets was $3.4 billion. In addition, four other assets were divested in 2012 by NNPC to NPDC under the NAOC JV which the Department of Petroleum Resources, DPR, valued at $2.225 billion.
“NPDC is contesting these valuations even though it currently operates these 12 OMLs without paying in full, the undervalued rates (Paid only a $100 million) nor the new figures arrived at by PwC and the DPR. In total, the non-payment for the 12 oil blocks by NPDC sums up to $3.925 billion.”
Adio maintained that the call on the Federal Government to revisit and re-evaluate the divestments of Nigeria’s oil assets at a time the country is passing through very difficult economic challenges is therefore appropriate and timely.
