'Corrupt Oil Deal' Costs Nigeria $6bn

A deal struck by Shell and Eni for one of Nigeria's most promising offshore oil and gas blocks has illegally reduced the country's expected revenue by an estimated $6bn, Global Witness said November 26.

The projected lost revenue could fund Nigeria’s combined annual federal health and education budgets twice over, it said in a press release and in an interview on the BBC World Service.

The oil giants' 2011 deal for Nigeria’s OPL 245 offshore, mainly oil, licence hid contract terms that Global Witness, an environmental/human rights campaign group, now calculates has cut the Nigerian government's projected revenue from the oil fields by $5.86bn over the lifetime of the project – when compared with the terms prevailing before the 2011 deal, and assuming a $70/b oil price. 

Global Witness's Barnaby Pace said: “Shell and Eni execs set the deal up so that Nigeria would earn some $6bn less than it could have. This scandalous deal must be cancelled.”

It bases its calculation on International Monetary Fund recommendations that mature oil producing countries should receive 65% to 85% of petroleum revenues with the rest allowed to go to production companies; it says the current OPL 245 deal is projected to result in Nigeria receiving a historically poor share of just 41%.

Shell and Eni are facing bribery charges over the OPL 245 deal in an ongoing trial in Milan; the two jointly paid $1.1bn for the licence, some of which it is alleged went in substantial bribes. Both companies deny such accusations. Eni told the BBC that Global Witness had requested twice to be included as "aggrieved parties" by the Milan court and been refused.