COFEK question National Oil, Western Geco contract to store Kenya Oil Data

As posted by the consumer federation of Kenya on their website

In the MOU between NOCK and Western Geco

Section 2-2.2

NOCK has granted Western Geco exclusive rights to acquire any data over any offshore acreage-These exlusive permits are usually granted by the Minister for Energy and not NOCK

NOCK has granted Western Geco the right to store any existing data- Any existing data belongs to the government of Kenya and if NOCK allows Western Geco to host any such existing data especially where there are activePSCs the confidentiality of the data will be at risk.

NOCK has awarded the contracts for:

-Setting up a National data centre

-Setting up a seismic data Processing Centre

-and setting up a visualization centre to Western Geco

This will involve a lot of money and single sourcing of the contractor has been done  without any competitive bidding process

In clause 4.4 NOCK agrees to provide Western Geco with all current and future licence agreements

All PSCs are signed between the Government of Kenya and the license operators and whereas NOCK has agreed that  this clause is binding to it and Western Geco ; NOCK is only a government agency allowed to keep copies of PSC and has no legal right to give such documents to Western Geco as stated in the MOU.

In the signed non-exclusive permit withWesten Geco/ Schlumberger

In clause 6.2 of the MOU, NOCK agrees to shut competition from other Multi client survey providers such as PGS and ION Geoventures and reserve the rights to Western Geco.

It is important to note companies such as ION Geoventures had proposed negotiable terms similar to Western Geco’s final terms- If negotiations were held between NOCK and ION     Geoventures there was a possibilty of arriving at better terms. It is also important to note that over the same area NOCK had negotiated better terms with FUGRO than what has been signed with Western Geco.this is shown by comparison of the financial terms of both agreements from the second and third tiers.

In clause 3.2 NOCK  agrees to assist Western Geco in Customs exemption for equipment yet Schlumberger has a Kenyan office. This is an avenue that is likely to be misused with the support of  NOCK

In article 4 NOCK commits to influence promotion of the data packages and Licensing of the blocks.This is a good avenue to enlist corrupt practices

Whereas the right to license blocks is vested in the Cabinet Secretary for Energy & Petroleum, NOCK in clause 4 commits that if the Cabinet Secretary so grants a license to another party other than through brokerage by Western Geco, the PSC holder must purchase the data from Western Geco at their price.

There is  a danger that if such company is not compelled under any law to purchase the data and NOCK has agreed to this arrangement NOCK will be penalized with Western Geco deducting such amounts from NOCK’s revenue share

At appendix 4

Under  the NDC project  all Kenyan Petroleum Data will be hosted by Schlumberger in UK

On top of the software license fees not to mention the software is leased to NOCK, there are daily data management rates ranging from USD 1,850 to USD 4,100 (or  KShs 159,100.00 to KShs 352,600.00)

For the project implementation phase which the contract does not offer specific details to be included NOCK has agreed to an implementation cost of USD 525,000.00 (or KShs 45,150,000.00)

The amounts involved are huge and no procurement procedures have been followed for this service. NOCK will continue paying the daily data management costs.

Other costs of access to be paid by NOCK per single user per year for the service:

Module Cost in USD per user per year Equivalent Cost in KShs per user per year
Archive only 8,1000.00 696,600.00
Archive and logs 13,500.00 1,161,000.00
Archive and Seismic 13,500.00 1,161,000.00
Enterprise Solution (Logs and Seismic) 18,900.00 1,625,400.00

 In Appendix 5

NOCK has contracted the same company to establish a Data Processing Centre at a cost of USD 247,607.00 (or KShs 21,294,202.00 ) without following any competitive procurement procedure. On top of this NOCK will incur anotherUSD 98,000.00 (KShs 8,428,000.00) to train its staff on the processing of the data. Thus the total for data processing centre including staff training is KShs 29,722,202.00

In appendix 6

NOCK has awarded the establishment of the data visualization centre to the same company at costs which the company says may range from USD 800,000.00 to 1,000,000.00 ( or KShs 68,800,000.00 to 86,000,000.00). this was equally not competitively done and the final cost is left to contractor to determine

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