Tuesday, 8 March 2016

PORT HARCOURT, Nigeria: FG Sues IOCs over $12bn Missing Oil Revenue



Source: THISDAY LIVE

In a move interpreted by industry watchers as a major step by the Muhammadu Buhari administration to curb the menace of oil theft in the country, the federal government has instituted civil suits against international oil companies (IOCs) operating in the country in a bid to recover over N2 trillion in alleged missing revenues from over 57 million barrels of crude oil shipments that were believed to have been declared or under-declared between 2011 and 2014.
THISDAY learnt that in the suits filed on the government’s behalf by a team of lawyers led by Prof. Fabian Ajogwu (SAN) against the oil giants, the government is praying the Federal High Court in Lagos to direct the oil firms to pay into its account with the Central Bank of Nigeria (CBN), the sum of over $0.6 billion (comprising $51,033,180, $462,681,780, and $145,551) in the first instance, being the value of missing revenues accruable to the government of Nigeria from the shortfall/undeclared/under-declared crude oil shipments made by the defendants.


The federal government’s legal team explained in its deputations that the significant crude oil theft for which payment is being sought, takes the form of accounting fraud, non-declaration or under-declaration of crude and gas cargoes.
In one instance, the team revealed some cases where it was discovered that an oil tanker declared that it loaded about 50,000 barrels at Nigeria’s port, but the same vessel on arrival at a port in the United States, discharged over 60,000 barrels of crude oil revealing a difference of 10,000 extra barrels uncounted for.
It noted that it is all these cumulative differences that account for the losses running into billions of dollars in lost revenues.
The federal government’s suit may not be unconnected to President Muhammadu Buhari’s position from the outset of his government that a lot of the oil theft under his predecessor’s administration went on with the collusion of international oil tankers that lift Nigeria’s crude on behalf of the IOCs and the Nigerian National Petroleum Corporation (NNPC).
Shortly after he assumed office, he banned 113 vessels from lifting the country’s crude oil but was later to reverse the ban after pressure was mounted by the ship owners and Nigeria’s oil shipments suffered a decline in the global market.
In lifting the ban, Buhari had approved the consideration of all incoming ships subject to a letter guaranteeing that they were free and would not be used for any illegal activity.
The president had also directed a review of activities of all affected vessels to determine their culpability in illegal operations in Nigerian territorial waters.
The legal team, in the suits, stated that there is documentary evidence showing that over 57 million barrels of Nigeria’s crude oil was illegally exported by the oil companies and sold to buyers in the US alone from January 2011 to December 2014.
It went further to submit that the missing revenue due to Nigeria as a direct result of this non-declaration and/or under-declaration of shipments made between 2011 and 2014 to buyers in the US alone is valued at $12,722,600,327.
According to documents filed in court and sighted by THISDAY, at an official exchange rate of N197 to the dollar, the said amount translates to over N2,493,629,664,092.
Exhibits attached to the court processes showed that there were a series of investigations undertaken by a consortium of experts comprising Nigerian and American lawyers as well as technical partners (both foreign and local) engaged by the federal government.
The job of this consortium of experts, according to the documents, included intelligence-based tracking of the global movements of Nigeria hydrocarbons, including crude oil and gas, with the main purpose of identifying the companies engaged in the practice that led to missing revenues from crude oil and gas exports/sales to different parts of the world.
The outcome of the said investigations revealed that the crude oil declared to have been exported from Nigeria between January 2011 and December 2014, was less than what was declared to have been imported into the United States of America, a country that maintains detailed records and has stricter compliance measures.
Before filing the suits against the IOCs, THISDAY gathered that all the crucial data and intelligence reports submitted by the consortium of experts had been shared with the Economic and Financial Crimes Commission (EFCC), which in turn is poised to begin major recoveries from the errant companies for payment to the central bank account.
As at press time, the matter had neither been assigned to a judge nor a reaction received from any of the oil companies.
However, the current move is seen as one being pursued by the Buhari-led administration to curb oil theft, encourage transparency, sanitise the oil and gas industry, and send a strong signal that the days of oil theft are over.

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