Shell faces prosecution over criminal deals in Nigeria

March 1, 2019
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Dutch Public Prosecutor’s Office (DPP), says that they are nearing the conclusion of their investigation and are preparing to prosecute Royal Dutch Shell plc for its involvement in the 2011 controversial Oil Prospecting License 245 (OPL 245) in Nigeria.

The Royal Dutch Shell and Eni, Italian oil giant, along with a number of their senior executives are involved in law suits for their alleged role in the deal.

A recent report jointly inaugurated by the Human and Environmental Development Agency, Global Witness, RE: Common and The Corner House said the Federal Government of Nigeria had lost an estimated $6 billion to the controversial Oil Prospecting Licence (OPL) 245 deal.

Resources for Development Consulting, a research organisation focusing on oil and gas sector, was appointed to carry out the analysis.

Leaked documents from Shell had suggested the oil giant capitalised on the 2011 presidential election to get the Federal Government to sign the deal. But Shell and Eni have denied any wrongdoing, reiterating that they had acted correctly in the purchase of OPL 245.

Using a discounted cash flow analysis model made up of elements including fiscal terms, field data from various sources, an oil price assumption of $70 a barrel, the Resources for Development Consulting projected that Nigeria lost an estimated $4.5 billion based on 2003 fiscal terms on the deal.

Projecting further, they said the Federal Government lost N5.86 billion over the lifetime of the project based on 2005 fiscal terms.

At the presentation, Don Hubert, founder and president of Resources for Development Consulting, said the fiscal terms governing the OPL 245 deal only favoured Shell and Eni.

“The payment of $1.1 billion in 2011 was not only a payment to secure rights to OPL 245, the payment also served fiscal terms that were highly generous to the IOCs (International Oil Companies) but were highly detrimental to the government of Nigeria,” he said.

He added: “The lack of profit oil in the current fiscal terms that is governing OPL 245 will result, our analysis shows, in a loss to the Nigerian people of at least $4.5 billion.”

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