Items filtered by date: Friday, 19 January 2018

Nigeria has moved closer to turning an oil industry bill into law after a 17 year struggle to complete the legislation which aims to increase transparency and stimulate growth in the country’s oil industry.

Nigeria’ lower house of parliament has passed a version of the bill which is the same as one approved by the Senate last year. This is the first time both houses have approved the same version of the bill. It still needs the president’s signature to become law.

The legislation - known as the Petroleum Industry Bill (PIB)- was broken up into sections to help to get it through.

The House of Representatives passed the first part called the Petroleum Industry Governance Bill (PIGB) on Wednesday.

“The PIGB, as passed yesterday, is the same as passed by the Senate. We have harmonised everything and formed the National Assembly Joint Committee on PIB,” Alhassan Ado Doguwa, a key PIB lawmaker in the House of Representatives, told reporters in the capital Abuja.

“Every consideration of the bills is now under the joint committee. We have broken the jinx after 17 years. We are working on the other accompanying bills.”

The passage of the first bill means that the government can move forward with new taxation legislation, which could make it more attractive for companies to invest, particularly offshore.

“It’s an unprecedented step forward. The PIB is something that has defied the last two governments,” Antony Goldman of PM Consulting said.

“The detail of what is agreed will determine the extreme to which the bill takes politics out of the sector and tackles systemic corruption.”

Uncertainty over terms affecting taxation of upstream oil development has been the main sticking point holding back billions of dollars of investment for the oil industry. This will be addressed later in an accompanying bill.

Shell, Chevron, Total, ExxonMobil and Italy’s Eni are major producers in Nigeria through joint ventures with the state oil firm NNPC.

The speaker for the House of Representatives Yakubu Dogara said later on Thursday that “the new legislation will be transmitted to the President within the next few days.”

The governance section deals with management of the Nigerian National Petroleum Corporation (NNPC). The National Assembly Joint Committee is working on two more bills as part of the PIB.

Dogara added that NNPC would be unbundled as a result of the legislation going through.

The PIGB would create four new entities whose powers would include the ability to conduct bid rounds, award exploration licences and make recommendations to the oil minister on upstream licences.

Nigerian lawmakers ordered an investigation on Thursday into whether the government could recover $21 billion in revenues from international oil companies.

Editing by Jason Neely and Jane Merriman (Reuters)

Published in Economy

Nigeria has filed a claim against JP Morgan Chase for more than $875 million, accusing it of negligence in transferring funds from a disputed 2011 oilfield deal to a company controlled by the country’s former oil minister.

A spokeswoman for JP Morgan dismissed the accusation on Thursday, saying the firm “considers the allegations made in the claim to be unsubstantiated and without merit”.

The suit filed in British courts relates to a purchase of the offshore OPL 245 oilfield in Nigeria by oil majors Royal Dutch Shell and Eni in 2011.

At the core of the case is a $1.3 billion payment from Shell and Eni to secure the block that the lawsuit says was deposited into a Nigerian government escrow account managed by JP Morgan.

The lawsuit said JP Morgan then received a request from finance ministry workers to transfer more than $800 million of the funds to accounts controlled by the previous operator of the block, Malabu Oil and Gas, itself controlled by former oil minister Dan Etete.

The lawsuit said that JP Morgan then transferred the funds to two accounts controlled by Etete, without sufficient due diligence to make sure the money did not leave accounts controlled by the Nigerian government.

Reuters was unable to reach either Etete or Malabu for comment.

MILAN CASE

The filing seen by Reuters was made in London in November on behalf of the Federal Republic of Nigeria, and says that JP Morgan acted with gross negligence by allowing the transfer of the money without further checks.

It said JP Morgan should have known that, under Nigerian law, the money should never have been transferred to an outside company.

“If the defendant acted with reasonable care and skill and/or conducted reasonable due diligence it would or should have known or at least suspected ... that it was being asked to transfer funds to third parties who were seeking to misappropriate the funds from the claimant and/or that there was a significant risk that this was the case,” the filing said.

Late last year, a Milan judge ruled that Shell and Eni must stand trial in Italy, where Eni is headquartered, for a separate legal case in which Milan prosecutors allege bribes were paid to Etete and others as part of the same oilfield deal, including sums that went to Etete’s Malabu.

Both Eni and Shell have repeatedly denied any wrongdoing in relation to that case. Malabu has never commented on the case and Reuters has not been able to contact it.

Shell last year said it knew some of its payment to the Nigerian government as part of the deal would go to Malabu “to settle its claim on the block”, but that it was a legal transaction.

There are also ongoing investigations regarding the deal in Nigeria and the Netherlands, where Shell is based.

The license for the offshore block was awarded to Malabu in 1998 under then-President Sani Abacha, but Shell finalised a deal for the block with the Nigerian government in 2011.

A British court, in a judgement late last year that agreed to return to Nigeria $85 million in frozen funds related to the deal, said that Malabu was controlled by Etete.

Additional reporting by Alexis Akwagyiram in Lagos, Writing by Libby George; Editing by Andrew Heavens  (Reuters)

Published in Economy

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