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No open bid for oil block, House told

Posted by By JAMES OJO, Abuja on 2008/07/25 | Views: 2100 |

No open bid for oil block, House told


As the controversy surrounding the where abouts of $210 million raked from allocation of two oil blocks (OPL245 and 257) rages, the House of Representatives, probing the activities of Nigeria National Petroleum Corporation (NNPC) and its subsidiaries, has heard that the Presidency controlled and gave out names of companies that should be awarded oil blocks.

As the controversy surrounding the where abouts of $210 million raked from allocation of two oil blocks (OPL245 and 257) rages, the House of Representatives, probing the activities of Nigeria National Petroleum Corporation (NNPC) and its subsidiaries, has heard that the Presidency controlled and gave out names of companies that should be awarded oil blocks.

Former Director of the Department of Petroleum Resources (DPR) between 2001 and 2006, Mr. Macaulay Ofurhie, disclosed on Thursday there was no open biding for oil blocks, but only selective bidding authorized by the Presidency.

Ofurhie, who left DPR on retirement at the age of 60 years, said he came into the DPR in January 2001 from the NNPC explained that if there was any award of oil block, it was on ad- hoc basis and handled by the office of the special adviser to the president.

He was specific that there was no bid but marginal fields that were allocated by selective bidding.
"We had a mini bid or discretionary bid in October 2002, where they bid for OPL 256. It was a selective bidding where we had a letter from the presidential adviser on Petroleum and the letter was signed by Mr. Funso Kupolukun, the special assistant on Petroleum to the president.
"The letters were for bid on OPL 256 and we had some bid list that originated from there and we now processed the bid and we had only two bidders.

But he said in 2004, there was an open bid that was advertised and promoted and it is marketed round, adding that what happened in 2002 was not digital, while that of 2005 was more digital in operation where winners were given letters of offer on the spot.
For the selective bid, he said only two companies, Ocean Energy Nigeria and Statoil, were short listed.
On the approvals to award the blocs won by Ocean Energy, he also disclosed that, "it was a superior approval. I remember, I requested for that and I got it. The letter came with a list and we had the option of adding.

"We were not comfortable with the list and I remember, I told him if we could make it more robust, he explained, which he said he got an affirmative response."
He said main criteria used were the signature bonus, which was 70 percent and the remaining 30 percent for technical expertise.
The committee was told by DPR that there are inconsistencies in the record of payment that was made available to the House and asked that they be given more time to resolve the issue.
It was discovered that the wired payment for $2.5 million paid for OPL 257 in June 2003 by Vintage Oil spent five years before it was receipted on July 8, 2008.

According to Ofurhie, Vintage which made the payment "was not approved since it was not technically competent and they did not have any track record. There prospectus was also not known and they were asked to pair with Exxon Mobil. But Mobil rejected the pairing."

The committee also discovered that Shell paid $210 million in December 2003 as signature bonus, but only the sum of $1 million was reflected in the records, while Statoil also made a payment in 2003 but the receipt was issued in 2004. The controversial OPL 245 won by Malabo Oil, it was discovered that while $210 million was paid, it was later withdrawn and awarded to Shell which, paid $1 million as commitment fee before Malabo went to court.

Mr Babatunde Ajimoti of DPR told the ad-hoc committee on oath that he was sure that Shell paid the money, which has been placed in an Escrow account pending the resolution of the suit in the court.

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