Senate probes Shell over alleged Joint Venture agreement violation, wants $200m refunded to FG

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 i 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 (PDP- Rivers ).

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 Petroluem 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 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.

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.