Etete, Aminu’s Enduring Legacies in Oil Industry

As the implementation of the Nigerian Oil and Gas Industry Content Act of 2010 enters its 15th year, this landmark legislation has continued to deepen the participation of indigenous manpower and facilities in Nigeria’s oil and gas industry with the solid foundation laid by the former Ministers of Petroleum Resources, Chief Dan Etete and Prof. Jibril Aminu, to ensure the domiciliation of a large chunk of the yearly industry expenditure in-country, Ejiofor Alike writes

The increasing involvement of local Nigerian companies in mega oil and gas deals has justified decades of efforts to increase the participation of indigenous players in the oil and gas business.

The signing of the Nigerian Oil and Gas Industry Content (NOGICD) Act of 2010 by former President Goodluck Jonathan on April 22, 2010 was a game changer in the participation of indigenous manpower and facilities in the oil and gas sector.

Before the NOGICD Act was enacted, two Ministers of Petroleum Resources, Chief Dan Etete and Professor Jibril Aminu had laid a foundation for the implementation of what was later known as the Local Content Policy in Nigerian oil and gas sector to persuade the International Oil Companies (IOCs) to domicile a certain scope of the industry jobs in-country to encourage indigenous participation, boost Nigeria’s GDP and curb capital flight.

Etete, a technocrat, and statesman, is a towering national figure, widely celebrated in the oil and gas industry as one of the pioneers of the campaign for the indigenous participation in the industry.

 Indeed, his tenure as oil minister from 1995 to 1998 laid the groundwork for indigenous participation in the oil and gas sector.

Etete’s tenure prepared the policy instrument for the first marginal field bid round, conducted after his tenure in 2001, which transferred the ownership of oil fields that might not be economically viable to develop at a given time due to lack of infrastructure, their small reserves, and high development costs, from the IOCs to the Nigerian independent companies. 

Under the Petroleum (Amendment) Act No. 23 of 1996, which was enacted during Etete’s tenure as petroleum minister, the President of Nigeria had the power to declare a field as a marginal field.

The marginal field award was to encourage local companies to participate in the upstream sector of the oil and gas industry, which was the exclusive reserve of the deep-pocket multinational companies.

Before Etete’s efforts, Prof. Aminu had in 1990 as petroleum minister, championed the award of oil blocks to 11 Nigerian entities for the first time in the history of the Nigerian oil and gas industry.   

This discretionary award of oil blocks to grow the indigenous participation was premised on the fact that Nigerians who had worked in Shell, Chevron, Total, Mobil and other IOCs for several decades must have developed the skills and competences to operate small acreages.

 This was also intended to help Nigerians to develop more capacity and capability in the global oil and gas business.

The awards of Oil Prospecting Lease (OPL) 135 to Queens Petroleum, OPL 453 to Cavendish Petroleum, OPL 205 and 206 to Summit Oil International, and OPL 75 to Atlas Petroleum were some of the positive results of these efforts.

As efforts to deepen local participation in the upstream sector progressed, indigenous players were also encouraged in the oil services sector, which was dominated by the likes of Schlumberger, Haliburton and Baker Hughes, among others.

The efforts initiated by Etete to encourage the indigenous participation culminated in the signing of the NOGICD Act of 2010 by former President Jonathan on April 22, 2010.

 Before the Act was signed into law, indigenous manpower and facilities had accounted for only five per cent of the over $10 billion yearly industry expenditure due to the difficulty in implementing the Local Content Policy in the absence of effective legislation.

But with the enactment of the Act, it became mandatory for the IOCs to set aside certain categories of jobs in the industry for local manpower and facilities.

Within 15 years of the implementation of the Act, local content in the oil and gas industry grew to over 30 per cent from five per cent.

Today, Nigerians have developed capacity and capability to handle more challenging jobs in the oil and gas industry.

According to the Nigerian Content Development and Monitoring Board (NCDMB), which was created to implement the NOGICD Act, the number of fabrication yards across the country has increased, with line pipes now almost wholly produced in-country.

Pipe coating plants are also springing up, which has curbed capital flight, ensured job creation and skill acquisition by Nigerians.

Before the NOGICD Act, there were only 44 registered indigenous service companies in the country.

But the figure has since risen to over 90, while the rigs and marine vessels owned by Nigerians, which were less than five per cent before the enactment of the Act, have now grown to over 40 per cent.

The target of the NCDMB is to increase local content to 70 per cent in 2027, and retain $14 billion in-country yearly.

In the upstream sector, Nigerian independent companies have also grown the capacity to operate not only marginal fields but also larger acreages, accounting for the production of a significant chunk of Nigeria’s daily output of 1.8 million barrels of crude oil.

The ongoing divestments of onshore assets launched by the IOCs have also encouraged the local participation in the oil and gas industry.

However, Etete’s enormous contributions to the development of Nigerian oil and gas industry were nearly eclipsed by the controversy surrounding the OPL 245, which was the object of legal disputes and international arbitrations between the Nigerian government, Shell, and a Nigerian company, Malabu Oil and Gas Limited, between 1998 and 2011.

The administration of the late General Sani Abacha had on April 29, 1998 awarded OPL 245 to Malabu Oil and Gas Limited with a signature bonus set at $20 million.

Etete, the petroleum minister, was among the company’s shareholders.

The Nigerian military government also awarded OPL 246 to South Atlantic Petroleum, OPL 247 to Heritage Oil, OPL 248 to Zebra Energy, and OPL 216, to Famfa Oil Limited.

All these licences were awarded in accordance with the existing petroleum laws.

However, for unknown reasons, only OPL 245 was dogged by controversy and legal battles, which almost tainted Etete’s reputation globally.

By the terms of final settlement midwifed by former President Jonathan’s administration, Shell and ENI paid a total of $1.3 billion to Nigeria’s account at JP Morgan.

While $210 million of this amount was paid to the federal government as signature bonus, Malabu, the original OPL 245 allottees, received the balance.

But the agents of the administration of former President Muhammadu Buhari alleged corruption in the deal brokered by Jonathan.

It took Etete years of legal battles to clear his name and regain his integrity.

All attempts made by the Nigerian government in Italian and French courts to prove that there was corruption in the OPL 245 deal proved fruitless.

A Milan court in Italy had in March 2021 acquitted Shell, ENI and their past and present managers in the OPL 245 dispute.

The sentence, read out in court by judge Marco Tremolada, said the companies and defendants had been acquitted as there was no case to answer.

Prosecutors had alleged that nearly $1.1 billion of the purchase price of OPL 245 was siphoned off to politicians and middlemen, including Etete.

Prosecutors had also called for Eni and Shell to be fined and for some of the past and present managers from both companies to be jailed.

But the court ruled that there was no evidence of corruption in the OPL 245 deal.

The acquittal by the Italian court was clear evidence that there was no corruption in the OPL 245 transaction.

In June 2022, the Nigerian government also lost its $1.7 billion claim against JP Morgan Chase Bank over the transfer of proceeds from the sale of the OPL 245 in 2011.

The federal government had sued JP Morgan on the ground of “Quincecare duty”, alleging that the bank “ought to have known” that there was corruption and fraud in the transaction.

But the Business and Property Courts of England and Wales Commercial Court, had in its judgment, said there was no proof that Nigeria was defrauded in the deal.

French government had also cleared Etete of the conviction of money laundering charges preferred against him in a French court.

This was contained in bulletin number 3, dated March 7, 2014, issued by the Ministry of Justice, Criminal, Cases and Pardon Division, and signed by the magistrate in charge of the national criminal record, Xavier Pavageau.

The French court had in 2007 tried Etete in absentia, and fined him for alleged corrupt enrichment.

The outcome of these cases showed that Etete was wrongly labelled, leading to a loss of over $10 billion by Malabu Oil and Gas to the corruption allegations in the OPL 245 deal.

As Etete turned 80 on Friday, January 10, 2025, the Nigerian oil and gas industry will continue to have cause to celebrate his enduring legacy, which could not be tainted by the unfounded corruption allegations in the OPL 245 transaction.