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Nigeria: ‘Oil-gas sector mismanagement costs billions’


BBC News Africa

October 25, 2012

A leaked report into Nigeria‘s oil and gas industry has revealed the extent of mismanagement and corruption that is costing billions of dollars each year.

The report, seen by the BBC, was commissioned by the oil minister in the wake of this year’s fuel protests to probe the financial side of the sector.

It says $29bn (£18bn) was lost in the last decade in an apparent price-fixing scam involving the sale of natural gas.

It also calculated the treasury loses $6bn a year because of oil theft.

Nigeria is one of the world’s biggest oil producers but most of its people remain mired in poverty.

The Petroleum Revenue Special Task Force report is one of several commissioned by the government – and follows an outcry after a parliamentary investigation uncovered a massive multi-billion fuel subsidy scam.

That had been set up after angry nationwide protests in January when the government tried to remove a fuel subsidy.

Earlier this week, a campaign was launched to clean up Nigeria’s oil sector.

It was led by Patrick Dele Cole, a politician from the oil-rich Niger Delta region, who said that 90% of the stolen oil was refined in eastern Europe and Singapore.

The BBC’s Will Ross in Lagos says this leaked report exposes the extent of the rot in Nigeria’s oil and gas industry – all the way from the awarding of contracts to the sale of refined products.

It is staggering just how much money the people of Nigeria appear to be missing out on, he says.

Nigeria’s Oil Minister Diezani Alison-Madueke declined to comment on the specifics of the probe but said a report compiled from several committees set up earlier in the year to investigate the oil and gas sector was in its final stages and would be presented to the president soon.

‘Total overhaul’

The Petroleum Revenue Special Task Force, headed by former anti-corruption chief Nuhu Ribadu, revealed in its report that losses of revenue to the treasury over apparent gas price-fixing involved dealings between Total, Eni and Shell and government officials.

The report does not suggest the companies broke the law but called for measures to be put in place to ensure all transactions are more transparent.

It said that oil and gas companies owe the treasury more than $3bn in royalties.

For the period 2005 to 2011, it said $566m was owed in signature bonuses – the fees a company is supposed to pay up front for the right to exploit an oil block.

The report looked at the issue of discretionary licences which companies do not have to bid for.

Between 2008 and 2011 it found the Nigerian government had handed out seven discretionary licences, from which $183m in signature bonuses had not been paid.

A Shell spokesman said the company would not comment as it had not yet seen the report.

Our correspondent says it is well known that oil theft is a major problem in Nigeria, but the report says it may be reaching emergency levels as 250,000 barrels of crude oil could be being stolen every day – 10% of annual production.

The leaked report said that small-scale “pilfering” had been “endemic since at least the late 1990s”, but it also said it had heard allegations about thefts from crude export terminals, tank farms, refinery storage tanks, jetties and ports.

“Submissions to the Task Force alleged that officials and private actors disguise theft through manipulation of meters and shipping documents,” the report said.

“Yet there is also evidence that members of the security forces condone and, in some cases, profit from theft. The void in effective security likewise appears to increasingly hand over control of coastal and inland waterways to undesirable elements.”

The investigation showed that 40% of refined products – either refined in Nigeria or imported – currently being channelled through state-owned pipelines are lost to theft and sabotage.

Mr Ribadu’s investigation calls for a total overhaul of the industry with an oil sector transparency law requiring all companies to report all payments and publish all contracts and licences.

The Task Force also wants a special financial crimes unit to be established specifically for the oil and gas sector.

Nigeria oil spills: Shell rejects liability claim


BBC

October 11, 2012

The Anglo-Dutch oil giant Shell has rejected claims by four Nigerian farmers that it should pay compensation for damage to their land.

The farmers are suing the company in a civil court in The Hague, claiming oil spills ruined their livelihoods. Shell‘s lawyers told the court it could not be held liable because most spills were caused by criminal damage.

They said repairs were hard to carry out because of insecurity in the Niger Delta. Shell lawyer Jan de Bie Leuveling Tjeenk told the court that sabotage and oil theft were widespread in the region.

The case is being brought against Shell by the farmers and the Dutch arm of the environmental group Friends of the Earth. It is the first time a Dutch multinational has been taken to a civil court in the Netherlands in connection with damage caused abroad. The case is linked to spills in Goi, Ogoniland; Oruma in Bayelsa State and a third in Ikot Ada Udo, Akwa Ibom State.

‘Sabotage’

Earlier, Channa Samkalden, lawyer for the Nigerians, told the court that Shell had failed to maintain its pipelines, clean up leaks and prevent pollution. “Shell knew for a long time that the pipeline was damaged but didn’t do anything. They could have stopped the leaks,” she said. Judges are now considering the evidence and a ruling is expected early next year…Read more.

Africa’s Flourishing Niger Delta Threatened by Libya Water Plan


The Niger at Koulikoro, Mali.
Image via Wikipedia

Global Policy Forum

February 3,  2011

By Fred Pearce

Yale Environment 360

The Niger delta is Africa’s second largest floodplains. It sustains millions of farmers, fisher people and herders and is home of a rich diversity of wildlife. But, Libya supports a project to divert the Niger River for extensive irrigation upstream and make Libya self-sufficient in food. This plan is the result of a backdoor deal between Libyan leader, Moammar Gaddafi, and Mali’s President, Amadou Toumani Toure. Mali, one of the poorest countries in the world, has agreed to hand over land to a Libyan-controlled organization and “undisclosed rights” to the Niger delta in exchange for aid and investment. Yet, this will prove detrimental to Malian food security. The Niger delta will run dry, diminishing the seasonal floods and damaging the livelihood of millions of poor citizens.

Daouda Sanankoua is an aquatic mayor, and proud of it. The elected boss of the district of Deboye arrived for our meeting in the West African state of Mali last month by overnight ferry. At this time of year, the majority of his district is flooded. Thank goodness. “More water is good,” he said, peering at his foreign inquisitor over his glasses. “Everything here depends on the water, but the government is taking our water.”While we spoke, in the tiny schoolyard of Akka village, a few meters from the lapping waters of Lake Deboye, the headlines around the world brought news of flood disasters in Australia, Brazil, and Sri Lanka. But Daouda was grateful for the annual swelling of the River Niger, which left most of his 24 villages marooned. For without the water, they would be desert.The floods in what geographers call the inner Niger delta nurture abundant fish for the Bozo people, who lay their nets in every waterway and across the lakes. As the waters recede, they leave wet soils in which the Bambara people plant millet and rice, and they expose vast aquatic pastures of bourgou (or hippo grass) that sustain cattle and goats brought by nomadic Fulani herders from as far away as Mauritania and Burkina Faso. This inland delta is Africa’s second-largest floodplain and one of its most unique wetlands. Seen from space, it is an immense smudge of green and blue on the edge of the Sahara.But this rare and magnificently productive ecosystem is now facing an unprecedented threat, as a Libyan-backed enterprise has begun construction of a project inside Mali that will divert large amounts of Niger River water for extensive irrigation upstream…Read more.

US court upholds key Shell ruling in Nigeria


Logotipo Shell
Image via Wikipedia

Reuters February 4, 2011 by  Jonathan Stempel

New York: A US appeals court refused to  consider a lawsuit that accused the Royal Dutch Shell Plc (RDSa.L) of helping Nigerian authorities violently suppress protests against oil exploration in the 1990s. In a divided vote that prompted a bitter debate among some of its judges, the court left intact what some legal experts call a landmark ruling in September that companies cannot be liable in U.S. courts for violations of international human rights law. Read more

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