Audit-Report-on-NNPC

Investigative Forensic audit of crude oil revenues and remittances by NNPC (January 2012 – July 2013)
4.5. NPDC Liftings
4.5.1. Introduction
NPDC has the following assets:
100% ownership of five (5) blocks: OMLs 64, 65, 66, 111 & 119;
55% equity in eight (8) blocks: OMLs 4, 26, 30, 34, 38, 40, 41 & 42;
60% participatory interest in (4) blocks: OMLs 60, 61, 62 & 63; as well as
Varied interest in seven (7) deep water concessions 62 .
NPDC, like other upstream petroleum companies, is statutorily expected to pay Royalty and
Petroleum Profit Tax on its operations. Royalty is deducted from revenues as a first line charge while
taxes are computed after deducting qualifying costs.
Between 2010 and 2011, Shell Petroleum Development Corporation (SPDC) sold its 45% Joint
Venture minority stakes in eight onshore marginal fields to indigenous oil companies 63 . The NNPC
further sold its interests in the divested assets to its fully owned subsidiary, NPDC.
The divested assets are being funded through Strategic Alliance Arrangements (SAAs) with Septa
Energy and Atlantic Energy. The company has also been running a Service Contract in its offshore
operations with Agip Energy and Natural Resources Ltd since 2001. 64
Atlantic Energy 65 : a private Nigerian-owned group of E&P companies, focused on
optimising under-developed assets in the Niger Delta, with offices in Lagos, London and
Zurich. The company has SAAs in place with the NPDC relating to NPDC’s 55% operated
interest in OML 26, OML 30, OML 34, OML 42 since 2011. NPDC holds a 55% legal interest
and is the operator of the OMLs. As part of the SAAs attributed to these leases, Atlantic
Energy (the SAA contractor) provides direct advice to NPDC on commercial, technical and
financial matters as well as pays NPDC’s share of OPEX and CAPEX cash calls. Atlantic
Energy then receives 100% cost recovery of the OPEX and CAPEX cash calls and a percentage
share of Profit Oil from NPDC’s 55% working interest. The SAA contractor receives its
entitlement from independent oil lifting rights.
Septa Energy 66 : is an indigenous Nigerian oil and gas production development company. It
has an upstream portfolio of assets onshore in the Niger Delta. The company has production
interests in OML 4, 38 and 41 through a Strategic Alliance and Service Contract with NPDC.
These assets sit within two core areas located in the South East and North West Niger Delta.
Under the arrangement, Septa is required to match NPDC’s 55% share of petroleum operation
costs for the development of the OMLs as well as provide training facilities for NNPC/NPDC
Vanguardngr
62
Source: www.npdc.nnpcgroup.com; Please note that we did not obtain any information directly from NPDC, and cannot
also confirm the completeness and accuracy of information on the Company’s website.
63
CBN’s submission to the Senate Committee
64
NPDC’s Submission to the Senate Committee
65
We obtained and reviewed a copy of the Strategic Alliance Agreement between NPDC and Atlantic Energy covering OML
30 only. The agreement alongside a Marketing Paper put together by Atlantic Energy was submitted to the Senate by CBN.
66
We obtained and reviewed a copy of the SAA agreement between NPDC and Septa Energy covering OMLs 4,38, 41; as well
as a press release by the parent company Seven Energy addressing the relationship with NNPC from www.sevenenergy.com
Confidential information for the sole benefit and use of the <strong>Audit</strong>or-General for the Federation.
PwC 80