Audit-Report-on-NNPC
Audit-Report-on-NNPC
Audit-Report-on-NNPC
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Investigative Forensic audit of crude oil revenues and remittances by <strong>NNPC</strong> (January 2012 – July 2013)<br />
4.3. Other Third Party Financing<br />
4.3.1. Introducti<strong>on</strong><br />
Out of the alleged unremitted 0il revenue of $20billi<strong>on</strong>, <strong>NNPC</strong> accounted for $2billi<strong>on</strong> as amounts<br />
generated under Other Third Party Financing Arrangements with two (2) Internati<strong>on</strong>al oil<br />
companies; Mobil Producing Nigeria (“MPN”) and Total Explorati<strong>on</strong> and Producti<strong>on</strong> Nigeria<br />
(“TEPNG”) 33 .<br />
Both oil companies made submissi<strong>on</strong>s at the Senate Public Hearing <strong>on</strong> the nature and status of their<br />
financing arrangements with <strong>NNPC</strong>.<br />
Our review of the oil companies’ submissi<strong>on</strong>s revealed that Mobil Producing Nigeria participated in a<br />
Joint Venture with <strong>NNPC</strong> <strong>on</strong> two projects, Reserves Development Project (RDP) and Satellite Field<br />
Development Project (SFDP), while TEPNG participated in the producti<strong>on</strong> of USAN crude oil stream.<br />
Their submissi<strong>on</strong>s further showed that <strong>NNPC</strong>’s lifting revenues for the third party financing<br />
arrangements with MPN and TEPNG were $1,376,820,326 and $1,053,519,002 respectively 34 ,<br />
totaling $2,430,339,328.00, as shown in Table C1 below.<br />
Joint Venture<br />
Partners<br />
Projects<br />
<strong>NNPC</strong>’s<br />
Revenue ($)<br />
<strong>NNPC</strong>/MPN Reserves Development Project (RDP) 518,069,354<br />
<strong>NNPC</strong>/MPN Satellite Field Development Project (SFDP) 858,750,973<br />
<strong>NNPC</strong>/TEPNG USAN Crude Oil stream 1,053,519,002<br />
TOTAL 2,430,339,328<br />
Table C1 – Submissi<strong>on</strong>s at the Senate hearing by Total and Mobil<br />
Modalities of the Projects<br />
Due to liquidity challenges, <strong>NNPC</strong> was funding Explorati<strong>on</strong> and Producti<strong>on</strong> (Capex and Opex) using<br />
external lenders. In this instance, the <strong>NNPC</strong> and its Joint Venture (JV) partners form a Special<br />
Purpose Vehicle (SPV) which sources funds externally. The SPV repays the lender using crude oil<br />
from producti<strong>on</strong>.<br />
<strong>NNPC</strong> operated two projects with Mobil Producing Nigeria; RDP and SFDP, and had a 60 percent<br />
share, with the remaining 40 percent for MPN.<br />
Vanguardngr<br />
The Reserves Development Project (RDP) was set up for the c<strong>on</strong>structi<strong>on</strong> and drilling of 27 oil wells<br />
in 10 Joint Venture assets, inclusive of three work-overs within three OMLs operated under the JV.<br />
The total cost of the RDP was $1.5billi<strong>on</strong> which was sourced as loans from both Nigerian and<br />
internati<strong>on</strong>al commercial banks. Each JV partner lifts separately with proceeds from crude oil sales<br />
deposited into an offshore Escrow Account.<br />
The Satellite Field Development project (SFDP) is a Joint Venture project set up to fund and develop<br />
up to 22 undeveloped oil and gas fields and restore producti<strong>on</strong> to two developed n<strong>on</strong>-producing fields<br />
in Nigeria. The Project was set up in phases with Phase 1 comprising the restorati<strong>on</strong> of two shut-in<br />
33<br />
Senate Committee Submissi<strong>on</strong>s<br />
34<br />
MPN and TEPNG ‘s Submissi<strong>on</strong> during the Senate Hearing<br />
C<strong>on</strong>fidential informati<strong>on</strong> for the sole benefit and use of the <str<strong>on</strong>g>Audit</str<strong>on</strong>g>or-General for the Federati<strong>on</strong>.<br />
PwC 60