The Nigerian people were cheated out of an estimated USD$6 billion when a 2011 oil rights deal enriched its own officials but really benefited two international oil majors – Royal Dutch Shell and the Italian Eni – instead of Nigeria, according to a report released Monday by London-based NGO Global Witness.

The report comes as the oil companies and key officials are on trial in Italy, facing corruption charges in what is a closely watched case. The prosecution began presenting evidence last month.

Yet long before that – when the deal was sealed shortly before midnight on April 14, 2011, the report says – Royal Dutch Shell knew that, in addition to alleged payouts that lined the pockets of Nigerian officials, the deal for oil block OPL 245 was misleading and would permanently rob Nigerians of profits from the oil produced.

That’s detailed in documents revealed as part of the investigation, Global Witness said in its update.

The Nigerian losses are based on an analysis completed by oil experts at Resources for Development Consulting, which works with resource-rich nations to ensure their extractive industry deals are fair. The HEDA NGO in Nigeria, RE:Common in Italy and the British-based The Corner House  joined Global Witness in commissioning the study. They have collaborated on OPL 245 in the past, as well as jointly publishing an October 2018 report that looks at World Bank investment in another Nigerian firm.

The losses to Nigeria

The new analysis pushes the numbers well beyond the $1.1 billion lost to alleged bribery, the report said. That’s because it takes into account the revenues that the Nigerian government should have seen over the life of the deal, which were erased when standard production-sharing contract provisions were removed by Royal Dutch Shell executives.

“The analysis of the contract terms estimated these changes could reduce the Nigerian Government projected revenue from the oil fields by $5.86 billion over the lifetime of the project when compared to the terms that had applied before the 2011 deal and assuming an oil price of $70 per barrel,” said Global Witness. “Shell and Eni are already facing bribery charges over the OPL 245 deal in a landmark trial in Milan. Today’s report shows the companies altered the terms of the agreement in their favor.”

For Nigerians, the $6 billion figure is twice the country’s annual budget for health and education. The International Monetary Fund suggests that mature oil-producing nations should see 65 to 85 percent of profits, but Nigeria won’t because, over the objection of some of its own leaders, key ministers and officials signed off on the deal. It offers little benefit to the country’s people, with 80 percent of them living on less than $2 a day, the NGO report said.

Those Nigerian officials include former oil minister Dan Etete, previously convicted of money laundering in 2007, and Mohammed Adoke, the former attorney general and justice minister charged with money laundering in Nigeria last year. In 2016, the Milan public prosecutor alleged that some of the millions diverted from the deal was destined for former Nigerian President Goodluck Jonathan.

Jonathan did not respond to Global Witness on the new findings but said nearly two years ago that he is neither accused nor charged of any corruption connected to the OPL 245 case. Etete also declined to respond to the new report findings, while Adoke cited, among other things, a 2018 Nigerian court ruling that protected him from personal liability.

The Italian courts so far

Italy’s investigation was spurred by reports from Global Witness, which has followed the suspect deal for years, as well as Nigeria’s Dotun Oloko and their anti-corruption partners. Other investigations have included work done by C4ADS in the United States and Finance Uncovered, based on leaked documents last year used to try and trace some of the $800 million allegedly paid to Etete for his role in the deal. Authorities in the U.S. and Nigeria also have investigated or brought charges based on the OPL245 case.

“Nigeria has already claimed in the English and Italian courts that it was the victim of a massive crime in the OPL 245 deal,” Global Witness said. “In 2014, Nigeria’s House of Representatives called for the deal to be canceled. This new analysis shows just how unfair this deal is. Shell’s and Eni’s contract for OPL 245 must be revoked.”

Royal Dutch Shell and Eni have denied wrongdoing since Italy’s 2017 decision to hold the trial. Shell disputed this new assessment, citing flawed methodology and other objections, and reiterated the company’s confidence that there is no basis to convict Shell or its employees.

Eni also declined public comment, citing the ongoing trial, but rejected “any allegation of impropriety or irregularity” and echoed Shell in characterizing the new assessment as “inaccurate, if not misleading.”

Employees of the oil firms facing trial include Eni’s current CEO Claudio Descalzi, former CEO Paolo Scaroni, Chief Operations and Technology Officer Roberto Casula, and two others. There are four Royal Dutch Shell staff members charged, including former board director Malcolm Brinded. Brinded remains a trustee of the Shell Foundation.

The complete “Take the Future: Shell’s scandalous deal for Nigeria’s oil” is available at this link.

Image: Royal Dutch Shell Nigeria