Crude Theft: FG Sues IOCs over $12bn Missing Oil Revenue

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Muhammadu Buhari
Buhari...understanding the dynamics of corruption
  • EFCC to begin recoveries from multinationals soon

Davidson Iriekpen

In a move interpreted by industry watchers as a major step by the Muhammadu Buhari administration to curb the menace of oil theft in the country, the federal government has instituted civil suits against international oil companies (IOCs) operating in the country in a bid to recover over N2 trillion in alleged missing revenues from over 57 million barrels of crude oil shipments that were believed to have been declared or under-declared between 2011 and 2014.

THISDAY learnt that in the suits filed on the government’s behalf by a team of lawyers led by Prof. Fabian Ajogwu (SAN) against the oil giants, the government is praying the Federal High Court in Lagos to direct the oil firms to pay into its account with the Central Bank of Nigeria (CBN), the sum of over $0.6 billion (comprising $51,033,180, $462,681,780, and $145,551) in the first instance, being the value of missing revenues accruable to the government of Nigeria from the shortfall/undeclared/under-declared crude oil shipments made by the defendants.

The federal government’s legal team explained in its deputations that the significant crude oil theft for which payment is being sought, takes the form of accounting fraud, non-declaration or under-declaration of crude and gas cargoes.

In one instance, the team revealed some cases where it was discovered that an oil tanker declared that it loaded about 50,000 barrels at Nigeria’s port, but the same vessel on arrival at a port in the United States, discharged over 60,000 barrels of crude oil revealing a difference of 10,000 extra barrels uncounted for.

It noted that it is all these cumulative differences that account for the losses running into billions of dollars in lost revenues.

The federal government’s suit may not be unconnected to President Muhammadu Buhari’s position from the outset of his government that a lot of the oil theft under his predecessor’s administration went on with the collusion of international oil tankers that lift Nigeria’s crude on behalf of the IOCs and the Nigerian National Petroleum Corporation (NNPC).

Shortly after he assumed office, he banned 113 vessels from lifting the country’s crude oil but was later to reverse the ban after pressure was mounted by the ship owners and Nigeria’s oil shipments suffered a decline in the global market.

In lifting the ban, Buhari had approved the consideration of all incoming ships subject to a letter guaranteeing that they were free and would not be used for any illegal activity.

The president had also directed a review of activities of all affected vessels to determine their culpability in illegal operations in Nigerian territorial waters.

The legal team, in the suits, stated that there is documentary evidence showing that over 57 million barrels of Nigeria’s crude oil was illegally exported by the oil companies and sold to buyers in the US alone from January 2011 to December 2014.

It went further to submit that the missing revenue due to Nigeria as a direct result of this non-declaration and/or under-declaration of shipments made between 2011 and 2014 to buyers in the US alone is valued at $12,722,600,327.

According to documents filed in court and sighted by THISDAY, at an official exchange rate of N197 to the dollar, the said amount translates to over N2,493,629,664,092.

Exhibits attached to the court processes showed that there were a series of investigations undertaken by a consortium of experts comprising Nigerian and American lawyers as well as technical partners (both foreign and local) engaged by the federal government.

The job of this consortium of experts, according to the documents, included intelligence-based tracking of the global movements of Nigeria hydrocarbons, including crude oil and gas, with the main purpose of identifying the companies engaged in the practice that led to missing revenues from crude oil and gas exports/sales to different parts of the world.

The outcome of the said investigations revealed that the crude oil declared to have been exported from Nigeria between January 2011 and December 2014, was less than what was declared to have been imported into the United States of America, a country that maintains detailed records and has stricter compliance measures.

Before filing the suits against the IOCs, THISDAY gathered that all the crucial data and intelligence reports submitted by the consortium of experts had been shared with the Economic and Financial Crimes Commission (EFCC), which in turn is poised to begin major recoveries from the errant companies for payment to the central bank account.

As at press time, the matter had neither been assigned to a judge nor a reaction received from any of the oil companies.

However, the current move is seen as one being pursued by the Buhari-led administration to curb oil theft, encourage transparency, sanitise the oil and gas industry, and send a strong signal that the days of oil theft are over.

  • Daniel

    Very good move.

    • duwdu

      I totally agree.

      May the good Lord give the government the resolve and wisdom to bring this process to conclusions that are favourable to our obodo Nigeria.

      P34c3
      …..

  • Artful ºDodger

    Slowly and steadily Nigeria will get there. These may be bad news for igbo miscreants and nuisances, what form of godliness is not nowadays?

    Well done Buhari, great day for the human race!

    • Ik Hammer

      When will your likes grow up? Was the law suit against ibos or are the multinational companies own by ibos. What as tribe or religion got to do with this commendable move of government to clear Nigeria of corruption? Na wa for u sha

    • Victor

      You need to learn to think very well before you write/talk and not the reverse.

    • Nigeria4u

      Your hatred for Igbos has made you and your colleagues to become foooolish and senseless. Be wise and stop ranting nonsense.

      • Odogwu

        You are a fool, who is talking about Igbo or Yoruba here? We are talking about all idiots that have in time past raped our collective patrimony and you are Bringing your senseless tribalism here, ewu can beer!

        • ndemokon

          Read again what Artful Dodger posted

  • God’s Judgement

    Irrespective of our religion differences or party affiliations let us pray like before for our God sent, able, strong and integrity President Buhari that Almighty God should shield him, protecting him and strengthen him to do the will of God which he has started. Above all, that all local international assassins will not harm him. This President is more than determine to bring any one down who has harmed or stolen from our nation.

    • Okafor

      I’ll not join those ‘prayer warriors’ because the president is not being fair; he disobeys the courts and partial and selective.

  • Enyidede

    Well done our President!! Keep it up.

  • God’s Judgement

    Irrespective of our religion differences or party affiliations let us pray unlike before for our God sent, able, strong and integrity President Buhari that Almighty God should shield him, protecting him and strengthen him to do the will of God which he has started. Above all, that all local international assassins will not harm him. This President is more than determine to bring any one down who has harmed or stolen from our nation.

    • Victor

      “This President is more than determine to bring any one down who has harmed or stolen from our nation”. Are you very sure of the above statement you made?. I ask because if this is truly the case one would expect the entire sixteen years of PDP rule to be probed at least.

      • frankiebabie

        No they should probe from amalgamation. Ozuoh.

      • Irele ati ITELORUN

        Why not start probe from 1914, the year Nigeria came into being, remember amalgamation from Nigerian history? that way no one will be excluded. PMB, has a 4 years mandate to clean this Augean mess, not 400 years. God will help and protect our president, criminals and their supporters will always find infantile excuses to berate your good work on nation building. Carry Go! God is on the Throne!

      • tunde008

        Let us support the little he can do for now, it is better than doing 16 yrs it will be too much to accomplish anything.You know so many bad past PDP leaders,Jerry Gana, David Mark, saraki, GEJ, OBJ, Doyin Okukpe , Bode george, Ekeremadu,Pius Anyand Abubarkar the general and IBB, lucky Igbinedion, Ibori etc these people helped messed nigeria up.

        • Okafor

          You did not include in your list the APC govs, serving and retired.

          • Jon West

            And Buhari, as Petroleum Minister under Obasanjo, Military Ruler and Head of PTF under Abacha. Let the probe be more comprehensive.

    • Toby

      Good one from PMB.
      Maybe it’s time he kicks out all foreigners in the oil and gas. We should use our local technology and local manpower and maybe save some foreign exchange from these multinationals. This may ultimately make the naira strong again for the benefits of PMB’s masses. They may call it an extension of the “local content and made in Nigeria” mantra. Time to really move from import dependency to self dependency including technology and critical manpower even in the oil and gas sector

    • Dawood

      ARREST JONATHAN, NOW! This Ebola President opened our dear country to financial rape and mutilation. All of them should be prosecuted.

    • Okafor

      International Oil Companies are untouchables. Those companies are very powerful and can together with their home countries bring down govts. I’ve watched the documentaries.

  • absam777

    This how to run a government. Diligence

  • AR

    A step in the right direction by PMB and EFCC. Forward ever.

  • RumuPHC

    Brilliant move by PMB!

    I always laughed out aloud whenever I hear Executives of IOCs, top ministers of the last administration including security chief announce without any form of remorse that Nigeria was losing about 150,000 barrels a day to oil thieves. Government budget between 2011 and 2015 actually made provision for revenue lost to oil theft!

    The question I ask myself and the source of my laughter is: How is it possible for thieves to be stealing a pre determined barrels of oil daily and how can thie heist be carried out without the connivance of the IOCs who operate the crude oil loading terminals in Nigeria?

    Thankfully President Buhari unlike Goodluck Jonathan has decided to ask himself this important question by commissioning experts to do the needful.

    Hopefully, the IOCs will be able to tell the Court the real story behind the missing 150,000 barrels a day oil cargo from Nigeria over the past 5 years.

    • Okafor

      By now the prisons would’ve full of ‘looters’. But no convict yet and from the look of things there will be none. Dem talk say EFCC na toothless bulldog. EFCC don mind dem, go collect another list from the presidency. Afterall that’s your paid to do.

      • RumuPHC

        You ought to know that EFCC can only investigate and prosecute accused in court of law. Proceedings in the court are the prerogative of the lawyers and judges. Our legal system is a mess and the judiciary cannot act out of the dictates of the process laid down. It takes ages to prosecute a case in court. Ask ATM in prisons across the country.

    • Jon West

      We were not really losing the oil in physical terms, although some 10,000 barrels per day were stolen by criminal gangs. The rest of the loss was through differed production and shut-ins. That is we were losing potential revenue due to non-production. Hope you are wiser now.

      • RumuPHC

        The chant was always “150,000 barrels lost to oil theft” and not to shut-in. Nigeria sold and will always sell her quota of oil production daily unless there are no buyers. Daily production from oil wells is quite different from daily lifting of oil from the export terminals. Each terminal has enough storage capacity for more than 3 days loading schedule and production shut-in within some oil fields will not necessarily affect export. Furthermore, bulk of our export is from offshore production facilities out of the reach of oil thieves. Go check the total barrels of oil lifted yearly during this period and you will see that we sold our daily quota to the international market.

  • Nigeria4u

    Buhari is spending billions on this case, I hope it will not be wasted efforts like EFCC who is spending too much to recover very less.

  • RumuPHC

    PMB is now venturing into the lions den; mr President will need to watch his back from now and our prayers are required to keep him safe from harm.

    The international syndicates of crude oil thieves that have milked Nigeria for close to a decade will not give up without a fight. These people are not the Col Dasuki type or Alex badeh and Olise Metuh kind. They are the deadliest of criminal made up of Italians, Lebanese and French syndicates operating with Nigerians in the IOCs and government. Nobody gives up $12bn without a fight!

    PMB is riding the Tiger amd only few have gone on such ride without ending up in the belly of the beast. Let us continue to pray for the survival of PMB and his able minister Ibe Kachikwu .

    • John

      My dear, you are totally correct, but did forget that a monkey is only known to be an expert in jumping, only when one tree is nearer to another. The so-called Lebanese mafians and their cohorts are strong when the larger populations of the citizens are not in the know of their atrocities. In this case, over 70% of Nigerians are watching very keenly to seeing the outcome of this cleaning exercise, and I tell you what, the thieves are very smart, and not insensitive to knowing that any wrong move could sell them out, and perhaps lead to the end of their games all around the world. They would rather pay the monies than to go under. Nigerians have never been so awaken in any national issues than they are this time.

      • RumuPHC

        Hmmmm……anyway we must fear this people and remain vigilant .

    • Okafor

      I talkam before

      • RumuPHC

        Wetin you talk….lol

  • Ehi Ehinomhen

    A very commendable move by PMB. I pray that it don’t turn out to be a protracted case. The Nigerian judiciary should ensure that this is concluded in a very short time and hopefully the prosecutors will not botch the case. The govt. also have to watch out for blackmail from the IOC’s.

  • tunde008

    Papa God thank you for giving us Buhari at this time.We pray you give him more wisdom,strength, guidance and knowledge to lead us out of this hardship PDP has put us for the last 16yrs.Papa please continue to bless our country Nigeria.Amen

  • bigdaddy

    PMB is now witch hunting the IOCs. Can the wailers concur please?

  • agbobu

    GOODLUCK JONATHAN YOU WILL END UP IN PRISON IN THE NEXT 4 MONTHS, FOR THE VERY GRAVE HARM YOU CAUSED NIGERIA. GOODLUCK JONATHAN YOU AND YOUR GANG OF VERY OBSCENE LOOTERS AND THIEVES STOLE ALL OUR WEALTH AND MONEY AND YOU HAVE THE TERMERITY AND THE AUDACITY TO RUB MORE SALT ON OUR MORTAL WOUND. SHAME ON YOU AND WE THE PEOPLE, THE MASSES WILL SEE WHO WILL HAVE THE VERY LAST LAUGH. GOODLUCK JONATHAN NOTE THAT WE THE PEOPLE, THE MASSES WILL HAVE THE VERY LAST LAUGH AND WE CAN ASSURE YOU THAT IT IS GOING TO BE A VERY LOUD AND A VERY SWEET LAUGH.

  • Thompson Iyeye

    As good as this might appear to be to prosecute the IOCs, particularly in the populist realm, this is the wrong time to take on the big boys (IOCs). The IOC’s account for over 90% of Nigeria;s oil production. At this time of economic difficulties of a Nigeria solely dependent on oil, it is prudent for the government to first get its house in order and attain some level of economic stability before taking on the IOCs. One would have thought the government learnt its lesson from the disastrous attempt to take on the shipping lines, where it was forced to make a shameful u-turn. The IOCs are by far more formidable customers to take on. Whoever is advising this government on strategy should be fired. This is just not the right time to prosecute the IOCs.

  • david soul

    All Nigerians need mental evaluation. All the people supporting buhari need mental evaluation. My question is what is been done by this administration that you can say because of this project Nigeria is bound to be a great country in 30yrs time???we know what Brazil did in the 70s today they are the second biggest economy in the America’s after the USA.for those of you who didn’t know what they did. They Brock down most of the Amazon for mass food and eternor production.today they are the largest producer of eternor in the world.

  • david soul

    What does it take for buhaha to do that????

  • david soul

    Let efcc do the job they are paid to do .and let the government do the job they are been paid to do.

  • david soul

    No songs of praise can change the reality in Nigeria today.the economy has lost over $70bn since buhari took over from Jonathan. When Jonathan hand over the GDP was officially $560bn but now it had shrink to $493bn in just 9 months.

  • david soul

    And all you hear from apc is probe this probe that. Nai probe be the only thing way una wan has 4yrs do?????

  • david soul

    Is it probe that will grow the economy??? The economy was growing over%7 before rebase and 6% after rebase. Now since oga buhaha took over in just 9months it’s now growing barely %2 and all you hear is songs of praise!!!!! Until Nigeria enter depression before buhaha will do something???

  • david soul

    Or are all Nigerian’s just retarded????? To be looking at danger and and yet singing songs of praise???

  • James Gunn

    Very good move from the President but I would have advised the cases to be entertained in the US courts. The US justice system is faster and to an extent incorruptible. Judgements can also be enforced swiftly. Dealing with the big boys here will be tough and how do we enforce judgements if they are indicted? We could be held to ransom because most of these IOCs are our JV partners. NNPC cannot go it alone and our local oil companies do not have the capacity if the foreigners decide to blackmail us. Lets see how it goes.

  • Jon West

    For once I have to support this action of the Certificateless One. However, these losses were really not physical losses, but loss of revenue due to production shut-ins and deferred production through sabotage. A small quantity was lost through the activities of criminal gangs. The major loss is really “legal”, because the IOCs exploit the ignorance, greed , ineptitude and laziness of NNPC, DPR and Ministry of Petroleum Resources personnel to bilk the nation of billions of dollars in unjustifiable costs.
    An IOC finance director once boasted that his company made more money from “Financial Engineering” read (manipulation of figures and budget padding) than in actual petroleum operations. This is where the losses really are and we should not chase shadows with accusations that can be easily disproven in court in a civilised environment. European and American courts are not the EFCC. They are very serious, legal(not moral) and also nationalistic. They will not destroy the revenue streams from their national oil companies readily, unless confronted with cast-iron evidence, and possible shaming.
    The problem is in financial accounting and “financial engineering “. We need experts in taxation, budgetting and petroleum engineering to oversee the activities of these mafia IOCs. This is what we should be doing, not the noisy EFCC garbage. Also, most importantly, we should take over the operations of these IOCs as allowed by our Joint Venture Agreemnets with the. Without doubt, we need clever, experienced,disciplined and honest Nigerians to do this and very quickly too.However, I reluctantly concur with the Certificateless One on transparency in IOC petroleum accounting.

    • RumuPHC

      The losses are physical. Vessels “top up” with extra crude oil above their nominated quantity when they load at terminals. The excess is sold and the money is shared by staff of the IOCs operating the terminal , NNPC officials in the crude oil marketing division, owner of oil lifting contract and vessel operator.

      The ” financial engineering ” you talk about is equally real and another huge source of revenue. There is no reason why Nigeria should be producing oil at $20 per barrel : it is institutional fraud by the IOCs and Nigerian accomplish in NAPIMS. This will hopefully be blocked by IBE Kachikwu when he renegotiates the terms of the JV and PSC together with planned reorganisation of NNPC with NAPIMS under the office of the Minister.

      It shouldn’t cost more than $6 to produce a barrel in Nigeria!