The Senate has decried the inadequacies of International Oil Companies (IOCs) in remitting substantial revenue to the Federal Government.
This is in tandem with shortfalls relating to the Egina Oil field and other related projects.
Egina Oil-field project conceived in 2008 is a deep offshore field comprising of a Floating Production Storage and Offloading Vessel (FPSO) and an Oil Offloading Terminal and Subsea Production.
It was developed by Total Exploration and Production Nigeria limited (24%) in partnership with CNOOC Energy Nigeria Limited (45%), Petrobras (16%) Sapetro (15%), to contribute an estimated 200.000 barrels of oil per day to the Nigerian daily oil production.
The project was expected to comply with the provisions of the Nigerian Oil and Gas Industry Content Development Act of 2010 by awarding required equivalent contracts to indigenous Nigerian companies; engaging local manpower and providing adequate manpower training/development programmes to the Nigerian workforce as well as ensuring the needed technology and knowledge transfer, proportionate to the overall project value and scope.
The project was estimated to cost USD6 billion but has undergone several cost variations that currently put its cost at over USD16.352 billion today.
However, its costs components have been reviewed twice from the initial USD 6billion (approximately) budget, once to USD 13 billion and more recently to USD 16.352 billion (approximately).
These local content elements as well as the cost variations of the project have been subject to several petitions and queries over the years of monumental fraud and acts of disregard for the NOGICD Act.
Other similar deep offshore oil field projects like the Egina oil field is Bonga South west and Zaba Zaba which have been stated to have serious local content implications by IOCs with sharp differing costs and variation.
Egina oil field has a life span of 25 years while the other two have 20 years life span respectively.
Speaking on this, the mover of the motion Sen. Adeola Olamilekan (APC, Lagos) on Tuesday stated that Nigeria may be perpetually in debt at the end of 25 years lifespan of these projects without any benefit.
Olamilekan expressing concern said: “My fear about these three projects is that the structure is not in the overall interest of Nigeria. I want to mention to my colleagues that while the first project is to cost $15. 5 billion, the next project of 450,000 barrels is to cost Nigeria $10billion while third project of the same capacity is to cost $ 6.5 billion.”
Speaking in contribution is Sen. Abdul fatai Buhari (APC, Oyo) who revealed the content of the meeting held with some of the IOCs.
Buhari said: “Yesterday when we had interaction with the various organizations concerned. We came across some important issues that we need to discuss here. The contract was signed for 20 years, they have already spent 12 years, the question we asked, is if they have recouped back their initial capital which they agreed.
“I told them that within the first 8 years, you have recouped back your capital; we now asked them what are you giving the federal government from the excess money you are now having? They said they were investing some certain money. So we asked where the document you are investing is? Nothing to show the committee.
“Yesterday, again, one of the agents was showing us a film. After he got to the third step, he showed where they were pumping gas into LNG and we asked what is the quantity of the gas you are pumping and how much volume you are being given and who are they giving the money to.
“He could not answer that one too. He said it was a sharing formula. We asked how much they are giving the Federal government from the money they are getting, they could not say. We need to go into the nitty-gritty and find out what is happening.”
Also addressing the issue was the Minority leader of the Senate, Godswill Akpabio (PDP, Akwa-Ibom) who described the oil industry as “very tricky,” saying “the more you look the less you see”.
Akpabio said: “As a matter of fact, when I had a privilege of sitting with them to have a discussion with the first major investment in the off shore industry which was done by Shell it was predicated on 25 years.
“We were shocked they realized their investment between the first 8 years. Still they are still taking the money and operating the contract like it was fresh. So Nigeria was not getting anything out of it.
“We asked them that is it because the contract is still continuous, that there seeing things to be done. I said if you have recovered the initial cost of the contract, how then the federal government is not making money. They said they are refueling and federal government is making 55% from the initial 15% they were supposed to be making.”
The lawmaker who lamented further said: “Now they have recovered and the contracts subsists till 2025 so what they have done is that they have reviewed graciously and given the federal government 55% because of this recession.
“So I said you make 35 % continuously from what you have recovered 8 years ago. From the onset, the contract is supposed to be build operate and transfer. Whether the time has gone or not they ought to transfer the assets to the federal government.
“Sometimes we talk about zero production in oil there is zero returns from NNPC, because of the nature of the contract like this. We must arrest it on time. From the initial cost of 6 billion dollars as at today, they have done variation upon variation they have added about 10 point something billion.”
The Senate then created an adhoc committee to investigate the local content elements and cost variations relating to the Egina Oil field Project and the two related Bongo Southwest and ZabaZaba projects.
The Chairman of the ad hoc committee is Sen. Solomon Adeola, while members include Sen. Godswill Akpabio, Sen. Tayo Alasoadura, Sen. Gershom Bassey.
Other members are: Sen. Kabiru Marafa, Sen. Philip Aduda, Sen. Albert Akpan, Sen. Ahmadu Abubakar, Sen. David Umaru, Sen. Chukwuka Utazi, Sen. Stella Oduah.
The committee is to carry out public hearing; ensure that there are no future changes necessitating further variations of the project cost; ascertain whether the cost variations have direct impact on the project scope and objectives and ensure that the costs variations have the required resultant effects on the local content elements of the projects.