Nigeria has lost out on tens of billions of dollars in oil and gas revenues over the last decade from cut-price deals struck between multinational oil companies and government officials, a report of the Petroleum Revenue Special Task Force has said.

The 146-page document was produced by the 17-member task force, which is headed by the former Chairman of the Economic and Financial Crimes Commission (EFCC), Nuhu Ribadu, set up by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, in January. It covers the year 2002 to the present.

According to the Reuters news agency, the report provides new details on Nigeria's long history of corruption in the oil sector, which has enriched its elite and provided the oil majors with hefty profits while two thirds of the people live in poverty.

Alison-Madueke confirmed on Tuesday that she had received the report last month but that it was a draft and the government was still supposed to give its input. But the report submitted by the Ribadu committee was marked “final”.
The report concluded that oil majors - Shell, Total and Eni - made bumper profits from cut-price gas, while Nigerian oil ministers handed out licences at their own discretion.

This, while not illegal, did not follow best practice of using open bids. Hundreds of millions of dollars in signature bonuses on those deals were also missing, Reuters reported.

“We have not seen this report and are, therefore, unable to comment on the content, but we will study it if and when it is published,” a Shell spokesman said.

The report alleges that international oil traders sometimes buy crude without any formal contracts, and the Nigerian National Petroleum Corporation (NNPC) had short-changed the federation of billions of dollars over the last 10 years by selling crude oil and gas to itself below market rates.

There was no suggestion that the oil majors or traders had done anything illegal, but the report highlighted a lack of transparency in their dealings.
The Ribadu committee was among several set up by Alison-Madueke following a week of nationwide strikes against a rise in fuel prices in January, which morphed into a campaign against oil corruption.

It had as its terms of reference: To work with consultants and experts to determine and verify all petroleum upstream and downstream revenues (taxes, royalties, etc.) due and payable to the Federal Government of Nigeria;

• To take all necessary steps to collect all debts due and owing;

• To obtain agreements and enforce payment terms by all oil industry operators;

• To design a cross debt matrix between all Agencies and Parastatals of the Federal Ministry of Petroleum Resources;

• To develop an automated platform to enable effective tracking, monitoring, and online validation of income and debt drivers of all parastatals and agencies in the Federal Ministry of Petroleum Resources;

• To work with world-class consultants to integrate systems and technology across the production chain to determine and monitor crude oil production and exports, ensuring at all times, the integrity of payments to the Federal Government of Nigeria; and

• To submit monthly reports for ministerial review and further action.

The report shows that billions of dollars of revenue was missing in unpaid debts from signature bonuses and royalties.
Nigeria Liquefied Natural Gas (NLNG) Company, which is jointly owned by the NNPC, Shell, Total and Eni, had paid the country for gas at cut-down prices before exporting it to international markets, the report added.

Total and Eni declined to comment because they invest in but do not operate Nigeria LNG, a role held by Shell.
“The estimated cumulative of the deficit between value obtainable on the international market and what is currently being obtained from NLNG, over the 10-year period, amounts to approximately $29 billion,” the report said.

It also said foreign oil firms had outstanding debts.
Addax, now a unit of China's state-owned Sinopec, owes Nigeria $1.5 billion in unpaid royalties, part of a $3 billion black hole of unpaid bonuses and royalties owed by oil firms.

Addax did not respond to requests for comment, but the report noted it disputes owing the signature bonuses.
Shell owes Nigeria's government N137.57 billion ($874 million) for gas sold from its Bonga deep offshore field, the report said, while oil majors owed $58 million between them for gas flaring penalties. They were also not adhering to newer higher fines.

The report also revealed that Nigeria was the only nation to sell all its crude through international oil traders rather than directly to refineries, adding that such trades were often opaque.

It said some international oil traders who were not “on the approved master list of customers” had been sold crude oil “without a formal contract” so little could be obtained about the details of these deals, which can be worth hundreds of millions of dollars.

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