SANA'A: Claims that Nexen, a Canadian based oil company operating in Yemen, was involved in a corruption scandal surfaced today, creating quite a stir in the industry and prompting the authorities to take a closer look at activities surrounding the oil sector. Nexen only recently lost its extension bid on Block 14, one of Yemen most productive and lucrative blocks. According to the PEPA (Petroleum Exploration & Production Authority), the block produced an average of 70,000 barrels of crude oil per day in 2010 and represented 19.9 percent overall for the year. After 5 years of intense negotiations, Nexen was told that the Yemeni government had decided not to renew their license, preferring to entrust PetroMasila, a new national oil company, with the running of the operations. Officials now revealed under cover of anonymity that Nexen's most senior management attempted to bribe members of the PEPA and high level managers within the Oil Ministry itself in the hope that they would sway the government's decision in their favor, finalizing a 5-year deal. Yemeni workers in Nexen revealed that such practices were quite common and that most tenders were negotiated in back streets rather than in the board room. “If a businessman was trying to get its proposal pushed through, he would simply bribe a staff member in procurement. Those with connections would make a phone call to the big bosses against monetary retribution of course and voila, the deal would be done; regardless of whether the company was best positioned to provide the required service. It has been functioning like that for years.” Sources privy to the extension negotiation process said that millions of dollars had been offered to officials, as well a share of the profits. “Nexen was willing to pay a hefty price to get the extension. The company has been on a 5-year negotiation marathon and it was willing to pretty much do anything to have the Yemeni government sign on the dotted line,” said a former member of the PEPA. The man added that TOTAL E&P was now facing the same situation. “TOTAL has been championing their extension plan for the past 2 years, trying to bring on board politicians and state officials to avoid the Hunt and Nexen debacle. To prove their willingness to invest on Yemen's future TOTAL promised to build Yemen a new power-station in Shabwa costing an estimated $150 million.” BM ShortURL: http://goo.gl/DiwxK Tags: corruption scandal, Nexen oil Section: Business, Latest News, Yemen
