Malabu deal may have cost Nigeria $10bn —Reps

The House of Representatives has joined the out cries over loses incurred by the country in the controversial Malabu oil deal with respect to OPL 245, saying the country may have lost about $10 billion in the deal.

The House, according to the Chairman, House Committee on Financial Crimes, Kayode Oladele, said available data indicated that the deal was never in the interest of the country.

Oladele spoke on Wednesday in Abuja at the anti-corruption situation room on public presentation of expert analysis of OPL 245 deal by Human and Environmental Development Agenda in partnership with Resources for Development Center, Canada; Global Witness, Re:Common and CornerHouse.

Oladele further said that the outcome of various studies from oil industry experts projected loss to the country at $4.5bn, $6bn, $9.8bn and $10bn based on lopsided Production Sharing Contracts that excluded some key components of the license like gas, adding that investigations were reinforced by the discovery that $1.1bn was paid by SHELL and Agip for OPL 245 disguised as payment to the Federal Government.

According to him, this happened despite common knowledge that the only entitlement of the federal government in the award of oil bloc was a signature bonus while the beneficiary of the award (in this case Malabu) was entitled to the full value of the block ($1.1bn) if it divests its stake.

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He said: “While litigation is ongoing in Milan, Italy against Shell and ENI over charges of bribery with respect to the deal, there are emerging facts to the effect that correspondences in the domains of Shell and ENI show that the multinational companies were alerted ahead by Nigerian civil servants that the transaction was deceptive and that the terms contain hiding clauses which ab-initio ought to have rendered the contract inappropriate.

“It is shocking to note, based on your expert analysis report, that information contained in the Resolution Agreements regarding OPL 245 which was signed in April 2011 and the Production Sharing Agreement (PSA) signed between ENI and Shell of 21 February 2012, projected resource output upon which the subsisting agreement was based is inconsistent with established industry-standard reserve estimation techniques.

“The new discoveries on the OPL 245, based on your evaluation analysis, further show that the fiscal terms that emerged from the Resolution Agreement of 2011 and the PSA signed between ENI and Shell in 2012 are not consistent with the essence of a normal production sharing system”.

Don Hubert, while presenting the Global Witness, Re: Common and CornerHouse report put the projected loss at $4.5bn, adding that the various figures should not be the focus but the fact that Nigeria was losing a huge chunk of what supposed to accrue to her.

Olanrewaju Suraj, HEDA’s Director, who also spoke, called on the Federal Government to revoke the licence because the country stood to lose more if it retained the deal.

According to him, the agreement was shrouded in corruption, adding that Nigeria was in an advantaged position to have its wishes granted if the revocation became a subject of litigation by the other parties.

Duran, who noted that the cost of gas was not factored into the agreement, said: “The cost of gas would be around $4bn if it were factored into the agreement by the 2011/2012 PSA made no provision that.

“So, when we added that to the initial loss of $6 billion, the country would have lost $10 billion when the gas component is added.”

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