The Nigerian government announced an investigation Monday into how a series of oil exploration contracts were awarded in Africa’s biggest crude producer.
Chinese and Indian-led consortia were the big winners in the 2007 auction for prospecting rights in 45 as-yet-untapped areas. The round was held under former President Olusegun Obasanjo but the administration of his successor, President Umaru Yar’Adua said Monday it was looking into how the contracts were awarded.
Energy Ministry Spokesman Fidelis Osamor said the government had suspended an official who helped lead the bidding process and that an “in-depth audit” would be held.
If the government invalidates the contracts, it would further roil an oil industry already beset by militant attacks and a battle with the government body that serves as partner with overseas operators concerning who should pay for infrastructure investments in Nigeria’s petroleum industry.
The latest auction didn’t attract competitive bids from the biggest oil companies working in Nigeria because the blocks on offer weren’t viewed to be likely producers.
Western firms such as Anglo-Dutch Royal Dutch Shell PLC and US-based ExxonMobil Corp. are the biggest operators in Nigeria, but Asian oil companies are making inroads in hopes of securing energy sources to fuel their growing economies.
Yar’Adua, who is from the same political party as Obasanjo, has overturned several privatization and other contracts Obasanjo inked in the waning days of his administration that ended on May 29, 2007.
Nigerians, accustomed to their country’s famously corrupt government, have questioned whether rules for awarding contracts were followed. Yar’Adua has made ensuring due process a touchstone of his rule.