Senate Probes Shell Over Joint Venture
Breach, Seeks $200m Refund To FG
The Senate, on Wednesday, June 22, 2022
constituted an Ad-hoc Committee to investigate Shell Petroleum Development
Company (SPDC) over non-compliance with the Petroleum Industry Act and breach
of the Joint Venture Agreement entered into with the Federal Government of
The Ad-hoc Committee was mandated to
probe the Oil Mining Lease granted to SPDC between 1959 to 1989, and 1989 to
2019 under the SPDC/NNPC Joint Venture agreement.
The Ad-hoc Committee constituted by the
Senate President, Ahmad Lawan, has Sen. Aliyu Sabi Abdullahi as its Chairman.
Other members of the Committee include
Senators George Thompson Sekibo, Abdullahi Yahaya, Bassey Albert Akpan,
Olamilekan Solomon Adeola, Smart Adeyemi and Aishatu Dahiru Ahmed.
Accordingly, the Chamber demanded a
refund of $200 million (USD) or any amount short of what was paid by SPDC,
including penalties and interests under the said lease agreements to the
coffers of the Federal Government.
The resolution was reached by the Chamber
after it considered and passed a motion sponsored by Senator George Thompson
Sekibo (PDP, Rivers East).
The motion was titled, “non payment of
the sum of $200,000,000 accruals from the Oil Mining Lease (OML), by Shell
Petroleum Development Company of Nigeria Limited under the SPDC/NNPC Joint
Venture Agreement and, illegal and unlawful renewal of Oil Mining Leases by the
Ministry of Petroleum Resources/Department of Petroleum Resources (DPR)
contrary to the provision of paragraph 10 of the First Schedule to the
Petroleum Act 1969 (now Section 86(1) and 86(6) of the Petroleum Industry Act
Sen. Sekibo, while presenting the lead
debate, observed that the SPDC/NNPC Joint Venture (JV) agreement, is in
contravention of the provisions of the Petroleum Act 1969, by the defunct
Department of Petroleum Resources (DPR) and the Ministry of Petroleum
Resources, granted to the SPDC/NNPC a 30-year Oil Mining Lease from 1959 to
He observed that doing so constituted
an illegal extension of the Oil Mining Lease by 10 years in the first instance,
instead of the prescribed term of 20 years, without recourse to the provisions
of the Petroleum Act 1969 in paragraph 10 of the First Schedule.
According to the lawmaker, “upon the
expiration of the initial Oil Mining Lease in 1989, SPDC/NNPC JV, was granted
another 30-year Oil Mining Lease again from 1st July 1989 to 30th June, 2019,
by the Ministry of Petroleum Resource/DPR instead of the 20 years lease period
prescribed by the Petroleum Act, which is contrary to paragraph 10 of the First
Schedule to the said Act”.
He disclosed that in the initial
additional 10 years Oil Mining Lease of 1969 to 1989, illegally granted to the
SPDC/NNPC Joint Venture (JV) by the Ministry of Petroleum Resources/DPR, the
Federal Government lost fees, taxes, rents and royalties to the sum of $120,
Sen. Sekibo stated that in the second
instance of the extra 10 years, the Federal Government also lost a further sum
of $80,000,000, making total of $200,000,000.
He noted that a loss of $200,000,000,
which is equivalent to N83, 130, 000, 000 billion, could have been of great
value to the economy of the nation.
The lawmaker observed that the illegal
action by the Ministry of Petroleum Resources/DPR as regards the SPDC/NNPC JV
may not be the only non-compliant grant as details of other Joint Venture
agreements with: Chevron Nigeria Limited, ENI Joint Venture, EXXON Mobil Upstream
JV, Total E & P Nigeria Limited JV, need to be ascertained through a
thorough investigation to verify compliance with the provisions of the extant
Distinguished Sen. Sekibo expressed
worry that that the trend of illegal extension of Joint Venture (JV) period
from 20 years to 30 years lease period without recourse to the Petroleum Act
may have also applied to other Joint Venture agreements with the International
Oil Companies (IOCs) and need to be investigated.
Sen. Sekibo informed the Chamber that
SPDC went to Court on the clarity of the lease period and the judgment was not
in their favour as regards the additional 10 years lease period in the two
“Regrettably, the court failed to order
the SPDC to pay the arrears of the 20 years lease period to the tune of
$200,000,000 to the Federal Government for the illegal extensions”, he said.
The lawmaker further disclosed that a
whistle-blower petitioned the EFCC on the need to recover the sum of
$200,000,000 from SPDC for these illegal extensions by the Ministry of
Petroleum Resources/DPR and to further investigate all other Joint Venture
agreements that involved the aforementioned IOCs.
Accordingly, the power to make laws for
the Federation as vested in the National Assembly by the Constitution also
encompasses the power to make laws for the promotion of national prosperity and
a dynamic self-reliant economy as provided in section 16(1)(a) of the 1999
Constitution of the Federal Republic of Nigeria as amended.
The lawmaker emphasised that the
Constitution also gives power to each House of the National Assembly to carry
out appropriate investigation on observed misapplication of the laws enacted by
the National Assembly, as provided in Section 88 of the Constitution.
He stated further that Section 89 of
the same Constitution provides the process on how such investigation should be
Accordingly, the Senate resolved to
constitute an Ad-hoc Committee to investigate the non-compliance with the
Petroleum Act and the Oil Mining Lease granted to SPDC between 1959 to 1989,
and 1989 to 2019 under the SPDC/NNPC Joint Venture Agreement; and compel SPDC
to refund to the Federal Government the sum of $200,000,000 or any amount short
of what was paid, including penalties and interests under the said lease
Dr. Ezrel Tabiowo, FAI, FIMC, CMC, FCP,
Special Assistant (Press)
To President of the Senate
Wednesday, June 22, 2022.