The last couple of years have been tough for international oil companies operating in Nigeria: depressed prices and a wave of militant attacks on infrastructure in the Niger Delta have left them all with more than enough to worry about. Now, the Nigerian government has added a new woe. Lagos is suing Chevron, Eni, Total, Shell, and Petrobras for illegally exporting crude oil worth $12.7 billion in the years between 2011 and 2014. Exxon may also join the list of defendants.
According to government officials quoted by the Associated Press, the five companies failed to claim 57 million barrels of crude as exports for the period, bound for the U.S, which was discovered through differences in the amounts declared at departure and arrival, with some loads not declared upon departure at all.
This means the affair has a lot to do with corruption in Nigeria, which has been desperate to clean up its image as one of the most corrupt countries in the world.
A lot of these efforts target the country's oil industry, and specifically the state oil company, Nigerian National Petroleum Corporation. Earlier this year, a government audit revealed the NNPC had failed to pay the state $16 billion in oil revenues. Later on, another $2.3 billion were uncovered to have not been paid into the Treasury Single Account. So, local corruption will be one major aspect of the lawsuits, which start next week with Chevron. Related: Did The World's Biggest Oil Company Boost Its Reserves Artificially?
Another important aspect will be the increasingly hostile sentiment of the local population towards Big Oil. The militant groups that are tirelessly attacking oil production and transportation infrastructure in the Niger Delta and that have crippled Nigeria's oil industry are a product of this sentiment.
As the AP notes, the Niger Delta communities are already at odds with Big Oil, accusing it, and with justification, of polluting the region. Just recently, Nigerian media reported that fishermen and farmers living in the Delta have been forced to abandon their work and property due to pollution, which has been aggravated by the militant attacks on pipelines. In addition to pollution, many in the Delta communities accuse the industry of failing to provide them with the jobs they promised, contributing to the widespread poverty in the region.
The most vocal among the militant groups, the Niger Delta Avengers, have made it their principal goal to force the Nigerian government to share the oil revenues it gets from the Delta with the local population, and other groups also claim to be defending the local communities' right to a bigger share of the oil dough.
In this environment, the lawsuits against the Delta field operators are more than likely to reignite the violence and possibly even intensify it. On the other hand, the very fact that the government is prosecuting Big Oil could have an appeasing effect on Niger Delta militants. The appeasement, however, would be directly dependent on the outcome of the court hearings.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
Your quote on this article as stated below prompted me to comment.
'This means the affair has a lot to do with corruption in Nigeria, which has been desperate to clean up its image as one of the most corrupt countries in the world'.
I want to point out that the multinational companies aforementioned creates the conduit pipe required for the looting of our national resources and this wasn't mentioned.
Tell me anywhere in the west where the likes of Shell, ExxonMobil, Total, etc will export oil without metering unit and what will be the yardstick for such measurement.
They've refused to install a metering unit in place to meter what is exported.
Best Regards,
Aniekan Inyang
The system does not have a structure on ground for proper monitoring of how its officials conduct business affairs with the big oil officials. This is a corruption affair between the Nigerian (departure) officials and the U.S. (arrival) officials the Big Oil is taking advantage of.
The Nigerian elites thrived in a culture of rule evasion, and corruption, a mode of life that is it easily changed. Government officials (elites) represented a large proportion of thieves-in-law (the elite of professional criminals). The system of governance continued with officials embezzling large qualities from the state and alienating the citizenry.
The Section 15(5) of the Nigerian Constitution makes it clear that "The State shall abolish all corrupt practices and abuse of office ..." President Buhari is giving life to this very important provision, with all targeted actions against corruption and his rallying cry to all "Nigerian Patriots" in the forefront of the war.
The local NNPC needs to be sanitized to improve its operations so that inefficiency and corruption could be reduced to a minimum. The Big Oil, if found guilty, should be criminally prosecuted along with the Nigerian officials involved. The U.S.department of justice should be equally initiated to investigate the officials involved at their arrival end. Certainly, it takes two to tangle!
Kola Olanrewaju