The Nigerian government has been fighting back against Royal Dutch Shell (NYSE: RSD.A) and Italian oil giant Eni (NYSE: E), two of the nations biggest foreign investors, over a case of potential bribery and corruption concerning one of Nigeria’s top oil blocks.
According to official London court filings, the African government has accused former President Goodluck Jonathan as well as his oil minister at the time of accepting bribes for a $1.3 billion oil deal eight years ago.
This deal, which saw the two companies secure the rights to the OPL 245 offshore oilfield, has created a legal case that extends across several countries.
The 2011 deal is also the subject of separate corruption trials in Milan where two middlemen in the deal have been convicted, as well as officials from both Shell and Eni are currently also on trial for similar charges.
Shell has repeatedly denied any wrongdoing in the OPL 245 deal, while an Eni spokesperson said they were evaluating whether UK courts had jurisdiction over the matter.
“If we come back and find that the parties were not transparent, and this wasn’t awarded transparently, then obviously the government has an option to decide to pull that [licence] back,” said Emmanuel Ibe Kachikwue, Nigeria’s minister of state for petroleum, who added that the government was focused on reaching a resolution to the dispute. “The participants in this are long-term investors in Nigeria, and they have other investments, and they’re running businesses here,” he said. “So it’s not like we’re chasing them out.”
The two companies paid around $1.3 billion for the oil block, but Nigeria suspects that the undeveloped area could be worth as much as $3.5 billion and that the companies owe them a figure closer to that ballpark.
Additionally, most of that $1.3 billion was transferred to Malabu Oil and Gas, a company controlled by Nigeria’s former oil minister Dan Etete. While the case revolves around Shell and Eni, the Nigerian government has also filed a London suite against JPMorgan for its role in transferring over $800 million of government funds to Etete, who has been convicted of money laundering.
Shares of the two oil companies didn’t move much in response to the news, with Shell moving up 0.7 percent while Eni inching downwards only 0.2 percent. While time will tell whether the two companies will face fines or even jail time for certain executives responsible for the deal, the entire affair remains a blemish on their reputations.
Shell Company Profile
Royal Dutch Shell is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2017, it produced 1.8 million barrels of liquids and 10.7 billion cubic feet of natural gas per day. At year-end 2017, reserves stood at 12 billion barrels of oil equivalent (including 2 billi
on for equity companies), 44% of which consisted of liquids. Its production and reserves are in Europe, Asia, Oceania, Africa, and North and South America.
The company operates refineries with capacity of 2.9 mmbd located in the Americas, Asia, Africa, and Europe and sells 18 mtpa of chemicals. Its largest chemical plants, often integrated with its local refineries, are in Central Europe, China, Singapore, and North America. – Warrior Trading News
ENI Company Profile
Eni is an integrated oil and gas company that explores for, produces, and refines oil around the world. In 2018, the company produced 0.9 million barrels of liquids and 4.6 billion cubic feet of natural gas per day.
At year-end 2018, Eni held reserves of 6.8 billion barrels of oil equivalent, 52% of which are liquids. The Italian government has de facto control of Eni through a 30.1% stake in the company. – Warrior Trading News