With their pioneering exploration and production activities, the International Oil Companies, IoCs, were well-entrenched, determining the pace in Nigeria’s petroleum industry.
Foreign oil services companies also dominated the scene, executing juicy contracts to the detriment of indigenous companies, despite the existence of experts and companies with required skill sets.
Consequently, some observers did not even expect the Nigerian Oil and Gas Industry Content Development Act, NOGICD Act of 2010, which stated that “All regulatory authorities, operators, contractors, subcontractors, alliance partners and other entities involved in any project, operation, activity or transaction in the Nigerian oil and gas industry shall consider Nigerian content as an important element of their overall project development and management philosophy for project execution” to yield fruits very early for a reason. Comparatively, the multinationals were more sophisticated than the locals.
However, the Act started to impact positively, especially as many locals were given more opportunities. This would not have been possible without the strong foundation laid by past ministers of Petroleum Resources, especially Senator Dan Etete, who was the Minister of Petroleum from 1995–1998, during the administration of the late General Sani Abacha as Head of State and Commander in Chief of the Armed Forces.
It is on record that a few weeks after mounting the saddle as Petroleum Minister, Senator Etete issued a directive informing the IoCs, that the ‘’sidelining’’ of indigenous companies in preference to foreigners would not be acceptable. Senator Etete is still widely celebrated as the champion of indigenous participation in the industry.
Specifically, his tenure produced the policy instrument for the marginal field bid round, conducted after his tenure in 2001, thus encouraging the IoCs to sell small oil and gas assets to indigenous investors interested in buying them.
Under the Petroleum (Amendment) Act No. 23 of 1996, enacted during Etete’s tenure, the President of Nigeria had the power to declare an oil field with about 10,000 barrels of oil per day (bopd) a marginal field to encourage indigenous businesses to participate in oil and gas exploration and production.
Before the Act, the deployment of indigenous practitioners and other resources accounted for only five per cent of the over $10 billion yearly industry expenditure, due mainly to lack of legislation. But with the Act, it became compulsory for the IoCs to set aside certain categories of jobs for local companies and within the next 15 years, the contribution of local content rose to over 30 per cent from a mere five per cent.
Consequently, the number of indigenous service companies increased to over 90 after the Act, from 44 before the enactment of the Act while the rigs and marine vessels owned by Nigerians, which were less than five per cent before the Act also rose to over 40 per cent.
The strides have given hope for the future, causing the NCDMB to profess that “the Board will continue to work on its plans to achieve the 70 percent in-country value retention in line with its 10-year Strategic Roadmap by the year 2027. The industry can only look forward to sustaining the drive to deepen local content, building on the 56.7% the Board thus far even though the Nigerian Oil and Gas Industry has been riddled with Forex crisis, revenue deficit and Gross Domestic Product (GDP) challenges. We hope that the remaining half 2024 will bring a full resurgence of the oil and gas sector and the achievements of the key focus areas of the Board 2024.”
Unfortunately, not many people remember Senator Dan Etete as an architect of local content and indigenous participation in Nigeria’s oil and gas industry and this is for a convoluted reason. Their recollections are beclouded by the controversies that surrounded the sale of the Oil Prospecting License 245 (OPL 245), which became the subject of long legal tussles between the government, Shell, and a Malabu Oil and Gas Limited, between 1998 and 2011.
The administration of the late General Sani Abacha had on April 29, 1998 awarded OPL 245 to Malabu Oil and Gas Limited with a signature bonus set at $20 million. It also awarded OPL 246 to South Atlantic Petroleum, OPL 247 to Heritage Oil, OPL 248 to Zebra Energy, and OPL 216 to Famfa Oil Limited amongst others in accordance with existing petroleum laws.
According to an entry on Eni.com. “In 1999, the FGN revoked 31 OPLs following a change in the interpretation of the Indigenous Concession Programme (ICP). The licenses revoked in this period did not include OPL 245; on the contrary, the Nigerian government confirmed its award to Malabu and invited the company to begin exploration.
OPL 245 would, however, be engulfed in controversy and legal battles, which impacted his reputation but a resolution was eventually reached.
The oil company website goes on to note that “To break the deadlock, the FGN’s then Minister of Justice, Mohammed Bello Adoke, proposed the following solution to the parties: first, the FGN would be the sole party to the contract with Eni and Shell; and second, the FGN would settle the ongoing legal disputes with Shell and Malabu by paying the latter compensation for giving up the rights to OPL 245. On 29 April 2011, Eni, Shell and the FGN signed a Resolution Agreement that transferred the rights to OPL 245 to Eni and Shell. This agreement included settlements made solely between Eni and Shell and the FGN, represented by the Ministers of Petroleum, Justice, and Finance. As part of this agreement, Shell and Eni paid $1.3 billion (the price plus the signature bonus) to an escrow account opened by the Nigerian Government with JP Morgan in London. Going by the terms of the final settlement midwifed by former President Jonathan’s administration, Shell and ENI paid $1.3 billion to Nigeria’s account at JP Morgan. While $210 million of the amount was paid as a signature bonus, Malabu, the original OPL 245 allottees, received the balance.”
Incidentally, the agents of the administration of former President Muhammadu Buhari suspected corruption in the deal and it took Senator Etete years of legal battles to clear his name.
The Nigerian government could not prove there was corruption in Italian and French courts. Prosecutors had alleged that nearly $1.1 billion of the purchase price of OPL 245 was paid to politicians and middlemen, including Senator Etete. Prosecutors also called for Eni and Shell to be fined while asking that some of the past and present managers from both companies should be jailed.
But in March 2021, the Milan court in Italy acquitted Shell, ENI and their past and present managers in the OPL 245 dispute. Also, in June 2022, the Nigerian government also lost the $1.7 billion case it instituted against JP Morgan Chase Bank over the transfer of sales proceeds from the sale of the OPL 245 in 2011.
The federal government had sued JP Morgan, alleging that it “ought to have known” that there was corruption and fraud in the transaction.
However, the Business and Property Courts of England and Wales Commercial Court, ruled that there was no proof that Nigeria was defrauded.
Similarly, the French government also cleared Senator Etete of the conviction of money laundering charges against him in a French court. The pardon was contained in “bulletin number 3, dated March 7, 2014, issued by the Ministry of Justice, Criminal, Cases and Pardon Division and signed by the magistrate in charge of the national criminal record, Xavier Pavageau.”
With the outcomes of these cases, Senator Dan Etete was able to clear his name from corruption charges. No wonder, the Ijaw nation, Nigerians, Africans, friends and associates worldwide rallied around to celebrate him during his recent 80th birthday.
Indeed, Senator Etete will continue to be remembered as the great pillar, who laid a strong foundation for the building of local content and indigenous participation in Nigeria’s oil and gas industry.
Source: Vanguard
