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Nigeria to lose $6 Billion in Revenue

by on November 26, 2018
 

Nigeria is set to lose an estimated $6 billion in revenue to international oil companies, Shell and Eni, over the deal on the controversial oil block, widely known as Oil Prospecting License (OPL) 245.

The prediction is according to icir.org. Leaked emails and confidential documents also showed that the oil giants might have used unethical means to secure the deal as they altered earlier terms on the oil block with the intention of depriving Nigeria billions of dollars of future revenue while raking in huge profits.

Detailed analysis shows that two weeks before the deal was signed in 2011, Andrew Obaje, then Director of Department of Petroleum Resources advised the Federal Government not to accept the deal because it was bad. Obaje’s advice was in response to Mohammed Adoke, the then Minister of Justice and Attorney General of Federation who sought his comment on the agreement.

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Obaje concluded in the letter that “the resolution agreement as proposed is highly prejudicial to the interests of the Federal Government, more so when there is considerable leverage on the part of the FGN irrespective of the outcome of the arbitration. Government should therefore re-evaluate the proposal with a view to securing for the FGN a more advantageous outcome from any resolution of the matter.”

Further checks revealed that  the Federal Government went ahead to approve the deal that stripped it of earlier favourable terms. The deal excluded Shell and Eni from paying royalty and Profit Oil on the OPL 245 which were part of the fiscal terms that were contained in the earlier contractual agreement with the oil companies in 2003 and 2005.

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Assuming that oil price remains at $70 per barrel, Nigeria loses $5.86 billion projected revenue over the lifetime of the oil block when compared to earlier terms that had applied before the 2011 deal. Barnaby Pace from Global Witness said “Shell and Eni execs set the deal up so that Nigeria would earn some $6bn less than it could have.

 

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