January 24, 2018 / 10:28 PM / 24 days ago

UPDATE 1-Nigeria's Senate launches Brass LNG corruption investigation

(Adds Chevron comment)

ABUJA, Jan 24 (Reuters) - Nigeria will hold an investigation into alleged corruption involving the state oil firm’s long-awaited Brass LNG project, including questions over the use of government funds.

The Nigerian National Petroleum Corporation’s (NNPC) liquefied natural gas project has been stuck in the planning stages for more than a decade, with some Western partners having pulled out because of tough operating conditions and an unfavourable investment environment.

Nigeria’s Senate, the West African nation’s upper legislative house, voted on Wednesday to launch the investigation of Brass LNG and its banking records, the Senate motion document showed.

A spokesman for NNPC said the company has not received an invitation from the Senate regarding the investigation, declining to provide further comment.

The Brass LNG company was originally set up in 2003, with NNPC owning 49 percent and affiliates of Conoco Phillips , ENI and Chevron each holding 17 percent, according to the Senate motion, citing corporate records.

Chevron pulled out of the project in 2006 and no longer has an interest, a company spokeswoman said. Conoco Phillips has also dropped out of the project.

In 2008 Total said that it had taken a stake in Brass LNG, without specifying the size.

A spokeswoman for ENI declined to provide immediate comment. Total and Conoco Phillips did not respond immediately to emails seeking comment.

According to the Senate motion, while Brass LNG’s bank account was intended to be held by the Central Bank of Nigeria, corporate records show it is with Keystone Bank.

The Senate documents said that the most recent deposit into the account was $648 million in September 2016 and that it currently holds $137 million. It did not provide detail on the discrepancy between the September 2016 deposit and the current balance.

A Senate committee will examine investments into Brass LNG, returns for the federal government, whether due process was followed and the signatories to the bank account. It is due to report back in four weeks.

Adding to challenges faced by investors, the Brass LNG project, which was to have annual capacity of 10 million tonnes, also suffered from a lack of dedicated gas reserves to underpin 20-year supply deals. (Reporting by Camillus Eboh; Additional reporting by Oleg Vukmanovic in London; Writing by Paul Carsten; Editing by David Goodman)

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