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Oil traders, NNPC officials interrogated, watch-listed in major investigation

By on June 8, 2015

A major investigation is underway in the oil and gas sector as the Economic and Financial Crimes Commission (EFCC) and The Department of State Security (DSS) are investigating the crude oil swap programme and the Offshore Processing Agreements (OPAs) involving the Nigerian National Petroleum Corporation (NNPC) and some local oil and gas companies.

The probe, which started at EFCC is also being looked at by the DSS in the last two weeks, has led to the interrogation, arrest, watch-listing and seizure of international passports of some NNPC officials and oil trading firms by the DSS. Those affected include Aiteo founded by Mr. Benny Peters, Sahara Energy founded by Tonye Cole, Tope Sonubi and Ade Odunsi; Ontario Oil & Gas founded by Walter Wagbatsoma; Taleveras founded by Mr. Igho Sanomi. NNPC officials being questioned and watch listed include Managing Director of NPDC, Mr. Tony Moneke; Executive Director, Commercial, PPMC Mr. Frank Amego; Group General Manager, Crude Oil Marketing Division, Mr. Gbenga Komolafe; and former MD of NPDC and later NNPC Group Executive Director, E&P, Mr. Abiye Membere.

Whereas Sahara Energy and Aiteo handled the OPAs, Taleveras, Ontario, international commodity trader Trafigura, and again Aiteo got crude oil allocations under the swap programme.

In a letter dated May 18, 2015, Alison-Madueke had, with the approval of former President Goodluck Jonathan, written to the EFCC requesting that it looked into the Swaps/OPAs “in order to clarify the status of crude oil allocations to the trading firms and the petroleum products that had imported into the country on behalf of NNPC’s product distribution subsidiary – Pipelines & Products Marketing Company.”

In an exclusive interview with THISDAY held in the United Kingdom on the eve of the Buhari Inauguration, the minister explained that she had written the petition just before her departure from office in order to clarify the situation on the oil swaps and OPAs.

She said: “In view of the negativities and various issues raised in the media on the swaps/OPAs, I had written to EFCC, with the former president’s approval about four weeks ago, to look into the swap/OPAs in order to clarify the actual situation.” But Alison Madueke’s letter may have been seized upon by the Chairman of Forte Oil Plc., Mr Femi Otedola, who, enjoying the backing of President of Dangote Group, Alhaji Aliko Dangote, may have brought the issues to the attention of President Muhammadu Buhari who immediately asked the DSS to “also look into the matter”.

The crude oil swaps refer to NNPC’s allocation of a certain quantity, usually about 50 per cent, of its domestic crude oil of 445,000 barrels per day (bpd) to oil traders, who in turn sell the crude oil in the international market and import petroleum products, including derivatives or byproducts, on behalf of NNPC and/or PPMC for onward sale and distribution in the country.

The outstanding quantity of crude oil that is not allocated to oil traders is moved to NNPC’s four refineries for local refining.
Depending on NNPC’s importation requirements and the grade of crude that is allocated, the derivatives or byproducts include kerosene, Jet A1 (aviation fuel), naphta, low pour fuel oil (LPFO), bitumen, and so on.

The crude oil swap programme has been in place for more than two decades and was precipitated by NNPC’s inability to refine and meet Nigeria’s fuel product requirements.

The OPAs, on the other hand, predate the swaps and first came into being when President Muhammadu Buhari superintended the oil and gas industry as Petroleum Minister between 1976 and 1979.

The OPAs entail the allocation of crude oil by NNPC to the oil traders, which in turn ship the crude oil to offshore refineries, usually in neigbouring West African countries, and the refined petroleum products, including derivatives or byproducts, are imported by the same traders into the country on behalf of PPMC.

However, the swaps and OPAs, in recent years, have been riddled with allegations that the Nigerian oil traders which got the crude oil allocations from NNPC were defaulting on their obligations to the corporation by not supplying either all of the petroleum products or part of the products in accordance with their contracts.

It was on this basis that Alison-Madueke had written the EFCC requesting that it investigates the swaps and OPAs with a view to ascertaining the true position of things.

THISDAY learnt that on getting the petition, EFCC swung into action by inviting the affected companies and their directors/officials.

Whereas Sahara Energy and Aiteo handled the OPAs, Taleveras, Ontario, international commodity trader Trafigura, and again Aiteo got crude oil allocations under the swap programme.

Sources informed THISDAY that when the companies were invited by EFCC, they explained to the commission that any concerns that may have arisen on the under-delivery of petroleum products were unfounded and that in the nature of such oil transactions under-delivery and over delivery were the norm such that there is always need for reconciliation. In the case of Sahara, such reconciliation was ongoing especially and their year-end was March 31 and they needed to close their books.

Backed by documentation, Sahara Energy officials were said to have informed EFCC and DSS that NNPC had first entered into an OPA directly with Société Ivoirienne de Raffinage (SIR), a refinery based in Cote d’Ivoire, in which Sahara has a stake, in 2009, following a tender process that was preceded by an advertisement in The Guardian Newspaper on November 17, 2008.

Under the OPA, Sahara Energy was said to have acted as the intermediary between NNPC and SIR and lifted about two vessels of crude oil (63,000bpd) monthly to the Ivorian refinery.
At the expiration of the OPA with SIR, NNPC signed new OPAs with Sahara Energy and Aiteo in January this year, and each firm was allocated 90,000bpd to ship the crude oil directly to refineries, and in turn import petroleum products into Nigeria.

A source close to Sahara Energy added that the current OPA it has is fortified by a revolving Letter of Credit (LC) opened by a foreign bank to cover the quantity of crude that is lifted by the firm in the event of a default.

This means that if Sahara or Aiteo default or under-deliver the products specified under their agreements, NNPC can cash the LC to recover its money.

They also informed investigators that under the OPA, a reconciliation process takes between the trading firms and NNPC every quarter to verify the quantity of Premium Motor Spirit (PMS, better known as petrol) that has been imported on behalf of the corporation or PPMC and retained products that had not been supplied which they pay for in cash.

The retained products are the derivatives or byproducts that are produced during the refining process.

Based on the last reconciliation undertaken in April this year, the source revealed, it was ascertained that NNPC owed Sahara Energy some $171 million for crude oil that it had not yet lifted but for which products were supplied.

At the same time when NNPC had an OPA with SIR, Sahara admitted it owed the corporation about $20 million which was paid to NNPC on June 1 following the reconciliation that began on March 31st.

In his petition as an oil industry whistleblower, Otedola may have also asked the DSS to invite the oil traders and further asked the security agency to investigate the crude oil lifting carried out by Atlantic Energy Drilling Concept Limited and Septa Energy, founded by Jide Omokore and his partner Kola Aluko, under the controversial Strategic Alliance Agreement (SAA) their firms had with NNPC’s exploration and production subsidiary, Nigerian Petroleum Development Company (NPDC).

The petition wants both firms and their founder/directors investigated for lifting NPDC’s crude oil over a three-year period but failing to remit the proceeds, taxes and royalty to the government treasury.

Their petition was said to have been expanded to include the probe of officials of NNPC, namely: Managing Director of NPDC, Mr. Tony Moneke; Executive Director, Commercial, PPMC Mr. Frank Amego; Group General Manager, Crude Oil Marketing Division, Mr. Gbenga Komolafe; and former MD of NPDC and later NNPC Group Executive Director, E&P, Mr. Abiye Membere, who was relieved of his position in March last year by former President Jonathan.

It went further to state that the probe would uncover a lot of shady deals in the oil and gas sector through which DSS could make recoveries totalling $25 billion on behalf of the federal government which is in dire need of the cash.

Although Otedola has denied to THISDAY that they were behind the petition to DSS, Presidency sources say that it was President Buhari who issued the directive to the DSS to investigate the swaps and OPAs, but the oil traders under probe are insisting that Otedola backed by Dangote was behind the petition to get business advantage as he was frozen out during the Jonathan years by then Minister Alison Madueke.

Further findings by THISDAY showed that since the DSS swept into action in the last two weeks, it has sent the names of the traders and NNPC officials to all exits points from Nigeria to prevent them from travelling and in some instances directed that their travel passports be seized and indeed has started to make substantial progress as some $115 million USD may have been recovered from Talevaras and 2 shiploads of petroleum products from Aiteo – which Aiteo officials said were already on the way to Nigeria as part of their contractual obligations. Officials also say the DSS may have also secured confessions from Ontario for between $800 million and $1.2 billion USD which it hopes to recover in the next few weeks. No official of Ontario could be reached at press time.

In this regard, Sanomi of Taleveras, who was said to have returned from Dubai last week had his passport seized but it was later returned to him following his interrogation and full cooperation.

THISDAY was informed that he was directed to report to the Director General of DSS, Ita Ekpenyong, but has received no formal invitation from the security agency to date.

However, those who have been invited, quizzed and given administrative bail by the DSS include Komolafe, Moneke, Amego and Membere.

In the course of interrogation, it was learnt that Moneke was alleged to have made a confessional statement on the quantity of crude oil lifted by Atlantic Energy/Septa amounting to $3.9 billion.

Membere, THISDAY confirmed, was in Texas, United States of America, when the DSS probe and clampdown began, but responded to the agency’s invitation when contacted by flying back to Abuja on Friday.

A source said he was at the DSS headquarters on Friday but was not compelled to relinquish his passport.

When contacted by THISDAY, Membere confirmed that he was invited last week while in the US and immediately flew back to Abuja to meet with its officials.

He however found it bizarre that one of his successors at NPDC had made a confessional statement alleging that crude oil amounting to $3.9 billion was lifted by Atlantic Energy/Septa under the SAA.

He said: “This is not possible because NPDC was not making that kind of money annually.
“By the time I left as GED E&P, NPDC’s crude output had peaked at some 150,000bpd from its legacy oil assets and those oil blocks that NNPC transferred to it after Shell and its partners had divested their stake in a number of oil fields to Nigerian oil firms.

“If we factor the old legacy Oil Mining Leases 111, 119 and others, which NPDC owns 100 per cent and were producing up to 60,000bpd, then the Seplat blocks producing another 60,000bpd that NPDC partly owns, plus those held partly by Neconde, ND Western Nigeria Limited and Afren, we would be talking of about 150,000bpd. So where could the $3.9 billion have come from?” he asked.

Membere said a lot of these figures that are thrown up in the air stemmed from ignorance and are contrived to unsettle select companies and individuals in the sector. Indeed a legal officer of Atlantic energy says they have not lifter crude in almost 2 years and have been reconciling their position with NPDC. And whatever is owed in their last lifting rounds will be paid off once the reconciliation is signed of as there is no cause for alarm by naysayers.

When contacted at the weekend on the probe, DSS spokesperson Ms Marilyn Oga confirmed that an investigation of transactions in the oil sector was ongoing but was non-specific on the nature of the probe.

She also confirmed that the DSS had received a confessional statement from one of those invited that over $3 billion in crude oil was lifted.

She however refused to divulge who made the confession and in what context the oil lifting took place.

When asked why the DSS had taken over the probe from EFCC and if it had the mandate to do so, she quoted Instrument SSS 1 of 1999 made pursuant to the provisions of Section 6 of National Security Agencies (NSA) Act LFN 1990, stating the major objective of the SSS is to protect and preserve Nigeria’s internal security and economy against acts of subversion, sabotage and other threats to the stability of Nigeria,

“The SSS shall in pursuance of its roles set out in Section 1 of this instrument perform the following functions: (i) prevention, detection and investigation of (a) threat of espionage; (b) threat of subversion; (c) threat of sabotage; (d) economic crimes of national security dimension; (e) terrorist activities; (f) separatist agitations and inter-group conflicts, e.g. threats to law and order,” the Act states.

Also, an intelligence source informed THISDAY that the probe by the DSS had started to yield results, as the oil traders had started to rush in cargoes of petroleum products for fear of being indicted by the security agency.

The source said though the recoveries may not be in the form of cash, the cargoes that were being imported with alacrity could also be considered monetary in nature, which the traders would have been forced to refund to the federal government.

He said it is these cargoes that were being brought into Nigeria and discharged at the product depots that have helped to some extent to bridge the fuel supply gap caused by the non-importation of fuel by other oil marketers who had stopped importing over the non-issuance of second quarter import allocations by PPPRA and uncertainty over the payment of their outstanding subsidy claim.

 

[ThisDay]

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