ExxonMobil Investigated over Questionable Oil Deal in Nigeria

Fredrick Ngugi Jun 24, 2016 at 10:35am

June 24, 2016 at 10:35 am | Money Moves

Fredrick Ngugi

Fredrick Ngugi | Contributor

June 24, 2016 at 10:35 am | Money Moves

An oil mining operation in Nigeria. The Peninsula Qatar

ExxonMobil, the world’s largest publicly traded oil company, is under investigation over a multi-billion oil deal known as the “Crown Jewels” that it made in Nigeria in 2009, according to the Guardian.

Documents obtained by the Guardian indicate that the Federal Ministry of Petroleum Resources in Nigeria wrote a letter to an Exxon subsidiary accepting a $1.5 billion bid to renew Exxon’s lease for Nigerian oil reserves for an additional 20 years.

However, the lucrative oil deal has come under scrutiny from Nigerian anti-corruption activists who question the manner in which ExxonMobil’s lease was renewed, despite its having offered the lowest bid.

The Guardian reports that Sunrise Power & Transmission, a local Exxon rival and affiliate of Chinese National Offshore Oil Corporation (CNOOC), had offered $3.75 billion for the same rights, raising questions as to what informed the ministry’s decision to go for the lowest bidder.

Nigerian activist Lanre Suraju, who reported the deal to Nigerian authorities, has confirmed to the Guardian that the deal is already under scrutiny by the Economic and Financial Crimes Commission (EFCC), although the commission has refused to comment on the matter.

Calls for Transparency

Exxon’s trouble comes at a time when the oil industry is facing myriad concerns over the manner in which companies acquire mining and drilling tenders.

The US Securities and Exchange Commission is expected to make a ruling on the Dodd-Frank Wall Street Reform and Consumer Protection Act that requires all energy companies to disclose the specific payments they make to foreign governments for mining and drilling rights.

“It’s vital that the US introduces strong transparency rules to bring these deals into public view, enabling citizens in Nigeria and other oil-rich nations to hold their governments and companies to account for how the money is used,” Dominic Eagleton of watchdog NGO Global Witness told the Guardian.

ExxonMobil in Nigeria

ExxonMobil began its Nigerian operations in 1955 under the name Mobil Exploration Nigeria Incorporated (MENI). It has since evolved and is currently operating a joint venture with the Federal Government of Nigeria through the Nigerian National Petroleum Corporation (NNPC).

The company retains 40 percent share of profits acquired from the venture while the remaining 60 percent goes to the Federal Government of Nigeria.

The new lease allows ExxonMobil to operate on the Oso, Ekpe, Edo, and Ubit oil fields, which are estimated to produce at least 580,000 barrels a day. This is almost one-third of Nigeria’s total oil production, which currently stands at 1.8 billion barrels a day.

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