THE WALL STREET JOURNAL/DOW JONES NEWSWIRES: Nigeria Senate May Probe Natl Oil Co For Graft –Media: “…committee, which met Monday, threatened to hand Funsho Kupolokun, managing director of the corporation, over to the Economic and Financial Crimes Commission, if he fails to explain in a month how and why the money was used. “Reports say Kupolokun traveled to Ghana with some Shell Petroleum Development Co. of Nigeria staff, to borrow the extra $600 million.”: “Royal Dutch/Shell Group (SC, RD), which owns part of SPDC, was not immediately available for comment.” (ShellNews.net)

DOW JONES NEWSWIRES

November 2, 2004

LAGOS -- A Nigerian Senate committee looking into massive cost overruns in the oil industry is threatening to launch a corruption probe against the state-owned oil company, local press reported Tuesday.

The Senate's Committee on Petroleum Resources (Upstream) Monday began an inquiry into $600 million spent by the Nigerian National Petroleum Corp. (NNP.YY) that wasn't approved by the government, the Guardian newspaper said.

The committee, which met Monday, threatened to hand Funsho Kupolokun, managing director of the corporation, over to the Economic and Financial Crimes Commission, if he fails to explain in a month how and why the money was used.

NNPC budgeted $3.2 billion for its operations in 2004 on projects run with its joint venture partners, but the committee said the corporation incurred the extra expense without approval from the National Assembly.

Reports say Kupolokun traveled to Ghana with some Shell Petroleum Development Co. of Nigeria staff, to borrow the extra $600 million.

"Who authorized you to outsource for the money? Why were you so interested in the money?" the committee queried Kupolokun in a letter summoning him to the meeting Monday, said reports.

Royal Dutch/Shell Group (SC, RD), which owns part of SPDC, was not immediately available for comment.

The committee also accused NNPC of inflating its partners' cost estimates in the 2004 budget by over $100 million.

NNPC represents the Nigerian government on the joint venture projects in which the state holds an average of 57% equity. Partners contribute to the projects in proportion to their equity holding.

The Senate committee also questioned Kupolokun over the manner in which the contracts for the development of SPDC's Bonga Field were awarded.

Kupolokun explained although the award was made before his appointment, he believed the process was fraudulent, said reports.

Kupolokun was appointed head of the NNPC November 2003, after the government sacked the former management led by Jackson Gaius-Obaseki, who was accused of wrongdoing.

Kupolokun said changes in the date of delivery of the floating, production, storage and offloading vessel, as well as changes to the design and other facilities, had led to rise in the cost of the Bonga project to $3.658 billion, up from $2.92 billion.

Bonga, the deep offshore field located on Oil Prospecting Lease 212, was slated to start production in late 2003, but has been delayed to the third quarter of 2005.

-By Vincent Nwanma; Dow Jones Newswires; +234-1-585-0849; vinwanma@beta.linkserve.com