Nigeria ‘lost billions’ on oil deal with Shell and Eni

Analysis raises questions of structure of a deal at the centre of a bribery trial


Financial Times, UK

A Nigerian oil deal at the centre of a landmark bribery trial involving Royal Dutch Shell and Italy’s Eni cut the African nation out of billions of dollars in potential revenues, according to a new analysis.

Resources for Development Consulting found that Nigeria stood to lose out on nearly $6bn in projected revenues because of the unusual structure of the 2011 deal for one of Africa’s most lucrative remaining oil concessions.

Campaign group Global Witness commissioned the consultants, who specialise in natural resource contracts, to scrutinise the impact on the Nigerian government’s finances.

The undeveloped deepwater plot, named OPL 245, is already at the heart of a corruption trial in Milan where prosecutors have alleged bribes of $1.1bn out of a $1.3bn deal were paid to public officials for the licence.

The report raises questions about why Nigeria would have agreed to such a deal and will be seized on by anti-corruption campaigners, who allege officials for years conspired with multinational companies to plunder the country’s oil riches.

Using publicly available contracts and industry methodology for assessing the value of the block, the authors found the 2011 terms for OPL 245 were hugely favourable to Shell and Eni.

“The fiscal terms that current govern Block 245 are not, in our view, consistent with the essence of a normal production sharing system,” said RDC in its assessment.

The new report found the companies would pay taxes to the government but the [government] would not receive royalty payments or an allocation of the oil produced after costs are taken into account, as is typical.

Assuming a $70 a barrel oil price, prior fiscal terms governing the plot from 2003 and 2005 would generate potential revenues of more than $14.3bn and $15.6bn respectively for the state. In the 2011 deal, this falls to $9.8bn.

The fallout of the 2011 deal has reached the top ranks of Shell, whose head has been subject to wiretaps, and Eni, whose chief executive is standing trial in Milan on charges of corruption.

Managers and middlemen from both companies are also standing trial. In September, a judge found two defendants — Nigerian Emeka Obi and Italian Gianluca Di Nardo — guilty of international corruption.

The Nigerian federal government has joined this case as the victim and is pushing for damages as part of the criminal trial. Prosecution evidence began in October 2018 and all the defendants have pleaded not guilty.

Global Witness, whose director was a witness in the Milan trial, has argued that the Nigerian government should revoke the OPL 245 licence as the country’s citizens are being “starved of funds”.

Shell said it could not comment in detail about the report given the Milan trial but said the deal was a “fully legal transaction”, adding there was “no case against Shell or its former employees”.

Eni said the analysis contained “incorrect technical and contractual assumptions” adding Nigeria has an option to take a share in the plot after costs have been recovered. It rejected any allegation of “impropriety or irregularity” in the deal.

The report comes as Nigeria has sought for decades to install a new framework to govern the petroleum sector, motivated in part by a sense that the state was not generating a fair revenue from deepwater oil blocks.

Shell’s chief executive this month maintained the deal’s legality but said the perception it was “unethical” had hit the company. “It is not [a position] that we would want to find ourselves in again,” said Ben van Beurden in a speech.

https://www.ft.com/content/f0713292-f16b-11e8-ae55-df4bf40f9d0d

How does this stop me from voting for PDP next year.?

Unless u show me what benefits this present adamnistration don do to better our lives, am sorry my vote is joining other million votes that will effectively red-card this president out of the pitch of our lives.

TheBlessedMAN:
How does this stop me from voting for PDP next year.?

Unless u show me what benefits this present adamnistration don do to better our lives, am sorry my vote is joining other million votes that will effectively red-card this president out of the pitch of our lives.

So you are happy with the deal outlined above? And presumably would welcome similarly arranged deals in future for your country?

Stop recycling old news as new one , this is the same same Malabu 1.1 billion alleged bribery scandal where even Buhari was a receiver through one Aisha Buhari and at no time was 6 billion looted the article is saying the deal was structured in way that the Nigerian govt would have lost 6 billion on OPL 145 which never happened so stop trying to great fake news ..Nobody looted any 6 billion anywhere

FarahAideed:
Stop recycling old news as new one , this is the same same Malabu 1.1 billion alleged bribery scandal where even Buhari was a receiver through one Aisha Buhari and at no time was 6 billion looted the article is saying the deal was structured in way that the Nigerian govt would have lost 6 billion on OPL 145 which never happened so stop trying to great fake news ..Nobody looted any 6 billion anywhere

Please stop deceiving yourself.

Rossikki:


So you are happy with the deal outlined above? And presumably would welcome similarly arranged deals in future for your country?

Na their oil money, your village get oil?

We are no longer interested in Jonathan.

[quote author=Rossikki post=73334230][size=12pt]Nigeria ‘lost billions’ on oil deal with Shell and Eni[/size
Btw the 2 big weight in this 2019 presidential election, buhari and atiku, I believe buhari has a lot to do with this scam cause somehow, his wife's name was mentioned.
we said good luck was incompetent, therefore, we voted buhari. Now we have seen from statistics presented by reputable organization like transparency international that goodluck is even better than buhari, let another try his chance. Infact we should continue to change them to show the power of the masses. Only then will they fear and give us good governance.

but mumu ipob pigdiots want FG to pay 126, 000 minimum wage despite their hero ole tactics.

[quote author=Stalwert post=73346817
126000, ie around 360 dollars. considering what our politicians are paid, ie commendable from them.

[s]

jude79:
[quote author=Stalwert post=73346817
126000, ie around 360 dollars. considering what our politicians are paid, ie commendable from them.

[/s]

İt would have been commendable if they did not use the same smelly mouth to defend corruption which deprives government of the resources to cater for the citizenry

Stalwert:
[s]

really!!! never knew they were part of the government. if

jude79:


really!!! never knew they were part of the government. if

yes sir you never know anything

Jonathan conveniently forgot to write about this huge fraudulent deal in his book. He also said nothing about Dasuki gate, immigration scam and lots of other corruption scandals that was the hallmark of his regime.

The best decision Nigerians made in 2015 was to vote out that rogue. The best decision we are going to make in 2019 is to reject Atiku whose intention is to take us back to the free for all corruption days of PDP.

Mtxheeew

Rossikki:
Nigeria ‘lost billions’ on oil deal with Shell and Eni

Analysis raises questions of structure of a deal at the centre of a bribery trial


Financial Times, UK

A Nigerian oil deal at the centre of a landmark bribery trial involving Royal Dutch Shell and Italy’s Eni cut the African nation out of billions of dollars in potential revenues, according to a new analysis.

Resources for Development Consulting found that Nigeria stood to lose out on nearly $6bn in projected revenues because of the unusual structure of the 2011 deal for one of Africa’s most lucrative remaining oil concessions.

Campaign group Global Witness commissioned the consultants, who specialise in natural resource contracts, to scrutinise the impact on the Nigerian government’s finances.

The undeveloped deepwater plot, named OPL 245, is already at the heart of a corruption trial in Milan where prosecutors have alleged bribes of $1.1bn out of a $1.3bn deal were paid to public officials for the licence.

The report raises questions about why Nigeria would have agreed to such a deal and will be seized on by anti-corruption campaigners, who allege officials for years conspired with multinational companies to plunder the country’s oil riches.

Using publicly available contracts and industry methodology for assessing the value of the block, the authors found the 2011 terms for OPL 245 were hugely favourable to Shell and Eni.

“The fiscal terms that current govern Block 245 are not, in our view, consistent with the essence of a normal production sharing system,” said RDC in its assessment.

The new report found the companies would pay taxes to the government but the [government] would not receive royalty payments or an allocation of the oil produced after costs are taken into account, as is typical.

Assuming a $70 a barrel oil price, prior fiscal terms governing the plot from 2003 and 2005 would generate potential revenues of more than $14.3bn and $15.6bn respectively for the state. In the 2011 deal, this falls to $9.8bn.

The fallout of the 2011 deal has reached the top ranks of Shell, whose head has been subject to wiretaps, and Eni, whose chief executive is standing trial in Milan on charges of corruption.

Managers and middlemen from both companies are also standing trial. In September, a judge found two defendants — Nigerian Emeka Obi and Italian Gianluca Di Nardo — guilty of international corruption.

The Nigerian federal government has joined this case as the victim and is pushing for damages as part of the criminal trial. Prosecution evidence began in October 2018 and all the defendants have pleaded not guilty.

Global Witness, whose director was a witness in the Milan trial, has argued that the Nigerian government should revoke the OPL 245 licence as the country’s citizens are being “starved of funds”.

Shell said it could not comment in detail about the report given the Milan trial but said the deal was a “fully legal transaction”, adding there was “no case against Shell or its former employees”.

Eni said the analysis contained “incorrect technical and contractual assumptions” adding Nigeria has an option to take a share in the plot after costs have been recovered. It rejected any allegation of “impropriety or irregularity” in the deal.

The report comes as Nigeria has sought for decades to install a new framework to govern the petroleum sector, motivated in part by a sense that the state was not generating a fair revenue from deepwater oil blocks.

Shell’s chief executive this month maintained the deal’s legality but said the perception it was “unethical” had hit the company. “It is not [a position] that we would want to find ourselves in again,” said Ben van Beurden in a speech.

https://www.ft.com/content/f0713292-f16b-11e8-ae55-df4bf40f9d0d

You brought up this old, recycled news for what reason exactly? Who told you $6 billion dollars was stolen? Anyway, was Aisha Buhari not also a beneficiary of your so-called $6 billion? It's like bmc has perpetual penchant for employing only illiterates

Pdp is dead already.

Stalwert:


yes sir you never know anything

So in all honesty, you accept and believe, that ipob or is it iPod is a part of buhari's government.
whoever sold this to u must be given award as world class salesman. anyway, enjoy ur knowledge.

kole work

another missing oil money scandal to tarnish GEJ and deflect from their failed satanic govt

Oga don't diverge us from BuhariAPC failures everywhere...!

Buhari is not human..! Almost sure.

TheBlessedMAN:
How does this stop me from voting for PDP next year.?

Unless u show me what benefits this present adamnistration don do to better our lives, am sorry my vote is joining other million votes that will effectively red-card this president out of the pitch of our lives.

It's not expected to stop you because it is certain you are pained your 5% vote in 2015 could not deliver victory for Jonathan

danot1030:


It's not expected to stop you because it is certain you are pained your 5% vote in 2015 could not deliver victory for Jonathan

Jonathan is not contesting rather a former APC presidential candidate is contesting against buhari. Jonathan failed according to transparency international, we ported to buhari. now that buhari has done worse than Jonathan according to same transparency international, let's continue changing all this selfish politicians until we get a better leader.
the party is immaterial since u can change to any party like changing clothes. If they start fearing the strength in our votes they'll start performing.

Na wa oo

seunmsg:
Jonathan conveniently forgot to write about this huge fraudulent deal in his book. He also said nothing about Dasuki gate, immigration scam and lots of other corruption scandals that was the hallmark of his regime.

The best decision Nigerians made in 2015 was to vote out that rogue. The best decision we are going to make in 2019 is to reject Atiku whose intention is to take us back to the free for all corruption days of PDP.

Sometimes I just wonder how some human evolved. Are we all really created by God? Or some just pop up from Kalakuta Republic into existence?

Still on distilled propaganda.
APC e-rats won't get tired of digging up old dirt and pouring it all on Jonathan and PDP.

NigerDeltan:

Na their oil money, your village get oil?

The oil belongs to the people of Nigeria, that's why it's proceeds are shared among its whole people.

id911:



You brought up this old, recycled news for what reason exactly? Who told you $6 billion dollars was stolen? Anyway, was Aisha Buhari not also a beneficiary of your so-called $6 billion? It's like bmc has perpetual penchant for employing only illiterates

Give us the story from a credible source other than Fayose linking Aisha Buhari to the bribery scandal

Roger3D:
The oil belongs to the people of Nigeria, that's why it's proceeds are shared among its whole people.

what then is your state contributing so we can share everything together

NigerDeltan:


what then is your state contributing so we can share everything together

The oil belongs to Nigeria, this is but a fact, not an opinion or a sentiment. If by chance you disagree, feel free to channel it's proceeds to your oil rich state

FarahAideed:
Stop recycling old news as new one , this is the same same Malabu 1.1 billion alleged bribery scandal where even Buhari was a receiver through one Aisha Buhari and at no time was 6 billion looted the article is saying the deal was structured in way that the Nigerian govt would have lost 6 billion on OPL 145 which never happened so stop trying to great fake news ..Nobody looted any 6 billion anywhere

So nobody looted any $6 billions but somehow some Aisha Buhari collected something out of the non looted funds?
Now you can't, deceive us the article clearly demonstrated that some people at the top were paid to conspire against the people of Nigeria by losing 6. billion. Sad