Alleged fraud: Senate investigates Egina Oil Field’s cost variation from $6bn to $16bn

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The Senate on Tuesday  constituted an ad-hoc committee to investigate local content elements and cost variations relating to Egina Oil Field and Bonga South-West and ZabZaba projects.
This followed a resolution by the lawmakers, sequel to a motion by Sen. Solomon Adeola (APC-Lagos) and co-sponsored by 18 others.
In the motion, Adeola, who is Chairman of Committee on Local Content, said that various contracts were awarded for various components of the Egina project.
He expressed concern that many of the contractors handling the projects were found to have engaged sub-contractors to provide various aspects of the project’s components.
He said that the Egina project was expected to comply with the provisions of the Nigerian Oil and Gas Industry Content Development Act of 2010.
Adeola stated that the project managers were expected to award required contracts to Nigerian companies, engage local power and provide adequate manpower training and development programmes for Nigerian workforce.
He told his colleagues the oil field was expected to provide needed technology and knowledge transfers, proportionate to the overall project value and scope.
“At inception, the project was estimated to cost $6 billion but has undergone various cost variations that currently put its cost at over $16.35 billion.
“At inception, the project boasted of 24 million man-hour of work, representing 77 per cent of the workload for the project, and equivalent to a workforce of 3, 000 persons on average, over a period of five years.
“It is worrisome that over the life of the project, its cost components have been reviewed twice from the initial $6 billion to $13 billion and more recently, $16.35 billion.
“Meanwhile, petitions have been submitted to the effect that monumental fraud and acts of disregard for the Nigerian Oil and Gas Industry Content Development Act of 2010 abound on the procurement and contractual arrangements,’’ he said.
 
The lawmaker disclosed that the “Egina project is located within the Oil Mining Lease (OML) block 130 and covers an area of about  500 square miles.
 
“It is developed by Total Exploration and Production Nigeria Limited (24%) in partnership with CNOOC Energy Nigeria Limited (45%), Petrobas (16%) and Sapetro (15%).
 
“The essence is to contribute an estimated 20,000 barrels of oil per day to the Nigerian daily oil production from the planned 2018 commencement date and the oil field is situated at water depth of up to 1,750m.
 
“Engineering studies for the Egina Oil-Field Project began in 2008, with an approval of the National Petroleum Investment Services (NAPIMS) and the Department of Petroleum Resources (DPR) in 2008 and 2009, respectively.
 
Contributing, lawmakers expressed concern about infractions in contracts entered into by the Federal Government and International Oil Companies (IOC).
 
They decried the situation in the projects execution which had seen several billions of dollars lost to the contracts, impoverishing Nigerians and enriching the IOCs in the process.
 
The legislators called for thorough investigation into the allegations, stressing that the fight against corruption ought to extend to IOCs.
 
Consequently, the Upper Chamber mandated the committee to carry out a public hearing on the project and ensure that there were no other changes necessitating further variations of the project cost.
In his remarks, Senate President, Dr Bukola Saraki, commended Adeola for the motion.
He said that the issue of cost variations and lack of adherence to the local content law were paramount.
Saraki charged the committee to take the investigation seriously, adding that the allegations were enormous and should not be treated with levity.
“I find it difficult to understand why cost variation will move from $6 billion to $16 billion in 10 years – why such variations and when the Federal Government ever get revenue on these fields.
“If we allow this to go with the Egina project, other deep offshore will follow the same model and government will never get the revenue.
“The second issue is to ensure compliance with the local content law. The committee has the responsibility to turn in the report as soon as possible. We do not want the report to linger.
“Please ensure you are done in three weeks so that by the time we resume, we will consider the report and be able to address other projects that are going on,’’ he said.
Saraki urged members of the committee to ensure utmost transparency in order to unravel the truth.
The Chairman of the ad hoc committee is Sen. Adeola, while members are Sen. Godswill Akpabio, Sen. Tayo Alasoadura, Sen. Gershom Bassey.
Others are Kabiru Marafa, Philip Aduda, Albert Akpan, Ahmadu Abubakar, David Umaru, Chukwuka Utazi and Stella Oduah.

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