Nexen refutes Yemeni misconduct claim

Monitoring agency defends firm's record

By Dan Healing, Calgary Herald January 25, 2012

An online story from a news site in Yemen that claims Nexen Inc. attempted to bribe officials is being repeated on several Middle Eastern news websites.

The Yemen Post published a story Friday headlined "Canadian Nexen stood Behind Major Corruption in Yemen" and quotes unnamed Yemeni government officials who claim the Calgary-based company "was willing to give millions of dollars in bribes to Yemeni officials to help them stay in control of Block 14."

A Nexen spokesman said the claims are not correct.

"It is completely and totally unfounded," said Pierre Alvarez. "We have one of the most robust integrity monitoring processes in the industry. We operate by international standards as well as ours, that exceed any industry-wide standards out there."

The Yemen Post story admits more investigation is needed to substantiate the claims. On Monday, it printed another story that claimed millions had been paid by unnamed foreign oil and gas companies to officials to please the ruling family and ensure they retained contracts.

The Post is considered independent, but Yemen's ministry of information is said to influence media through means including its control of printing presses and granting newspaper subsidies.

Nexen's production-sharing contract on the block, also called the Masila block, expired Dec. 17 and was not renewed, despite the efforts of a Nexen delegation headed by president and chief executive Marvin Romanow.

Romanow left the company this month.

Alexandra Wrage, founder and president of the anti-corruption agency TRACE International, said it's difficult to say if the charges are believable.

"The rumour mill is rife. . . . we have people checking the multilingual media," she said. "And to be clear, I have absolutely no confirmation that there is anything to this at all."

She said it's unusual the allegations are coming from inside Yemen, instead of from a country with an anti-corruption infrastructure, adding that suggests Nexen may be being named to advance domestic political goals.

Wrage added Nexen has an excellent reputation for its "robust anti-bribery" policies, noting its lawyers speak at anti-corruption events and the company is known for its community responsibility practices.

Yemen has been the site of violence for nearly a year as pro-testers attempt to unseat President Ali Abdullah Saleh. He left the capital, Sanaa, on Sunday to go to the United States for medical treatment, but vowed to return to Yemen.

Nexen's production from the Masila field was estimated at more than 24,000 barrels of oil per day in 2011 and the field had given the company 1.1 billion barrels since Nexen discovered it in 1987 and it began producing in 1993. Block 14 was handed over to PetroMasila, a Yemeni company created for the purpose.

Nexen still holds a production sharing agreement on Block 51 (also called East Al-Hajr) in Yemen, which currently produces 6,000 to 8,000 bpd net to Nexen. The deal expires in 2023 and the company has said it is considering whether or not to retain such a small asset.

The allegations come seven months after Calgary-based producer Niko Resources Ltd. was handed a $9.5-mil-lion negotiated penalty after pleading guilty to one charge under Canada's Corruption of Foreign Public Officials Act.

Niko admitted it had paid off a Bangladeshi minister with the use of a new black Toyota Land Cruiser and a trip to Calgary and New York in 2005.

Wrage said the penalty, the Canadian court's heftiest punishment under the act, has caught the attention of Canadian companies who are signing up for more anti-corruption events and de-voting more staff time and resources to the issue.

Niko was also placed on a court-supervised probation for three years, during which time it must make strides in improving corporate culture.

The Niko indictment followed a six-year RCMP probe involving police in Calgary and law enforcement agencies in Switzerland, Japan, the U.K. and Barbados - an investigation that cost $879,000.