Report says Nigeria lost $6bn in controversial Malabu deal

Controversies surrounding the Malabu deal has continued to persist, as a new analysis by Global Witness has revealed that the deal involving Malabu Oil and Gas Limited in Oil Prospecting Lease (OPL) 245 deprived Nigeria of an estimated $6 billion.

The report says the amount doubles the country’s annual budget for education and health.

Global Witness, in the report, said it had spent years investigating the deal, which gave Shell and Eni the rights to explore OPL 245, an offshore oil field in the Niger Delta.

It added that it commissioned new analysis of the way the contract was altered in favour of the energy companies and concluded Nigeria’s losses over the lifetime of the project would amount to $5.86 billion, compared to terms in place before 2011.

A BBC report revealed that the analysis was carried out by Resources for Development Consulting on behalf of Global Witness with estimated losses calculated using an oil price of $70 per barrel as a basis.

Eni has however criticised the way it was calculated because the calculation allegedly ignored the possibility that Nigeria had the right to revise the deal to claim a 50 per cent share of the production revenues.

“We discovered that Shell had constructed a deal that cut Nigeria out of their share of profit from the block,” a campaigner at Global Witness, Ava Lee, told the BBC’s World Business Report.

He added that ”This amount of money would be enough to educate six million teachers in Nigeria. It really can’t be underestimated just how big a deal this could be for a country that right now has the highest rates of extreme poverty in the world.”

Eni and Shell, who are being considered by for charges of corruption by a court in Milan for the controversial oil deal, have been accused of knowing that the money they paid to Nigeria would be used for bribes.

They have however denied any wrongdoing.

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A former Nigerian oil minister, Dan Etete, was found guilty by a court in France of money laundering and it emerged he used illicit funds to buy a speed boat and a chateau. It is also claimed he had so much cash in $100 bills that it weighed five tonnes.

The court in Milan is weighing evidence of how Etete, awarded ownership of OPL 245 to Malabu, a company he secretly controlled.

He was also accused of paying bribes to others in the government to ensure that process went smoothly.

Shell and Eni are accused of knowing the $1.1bn they paid to Nigeria would be used for bribes, claims based on the content of emails which have since emerged.

“Looking at the emails it seems that Shell knew that the deal they were constructing was misleading but they went ahead with it anyway even though a number of Nigerian officials raised concerns about this scandalous, scandalous deal,” Ava Lee of Global Witness, said.

Shell, in a statement to BBC World Business Report said: “Since this matter is before the Tribunal of Milan it would not be appropriate for us to comment in detail. Issues that are under consideration as part of a trial process should be adjudicated in court and we do not wish to interfere with this process.

“We maintain that the settlement was a fully legal transaction and we believe the trial judges in Italy will conclude that there is no case against Shell or its former employees.”

Eni has also denied any wrongdoing and told the BBC that it questions the competence of the experts commissioned by Global Witness and its “partners”, as well as raising the possibility that the report by the campaign group is defamatory.

The company also said “as this matter is currently before the Tribunal of Milan, we are unable to comment in detail.

“Global Witness together with its partners Corner House, HEDA Resource Centre and Re: Common had requested twice to be admitted as aggrieved parties in the Milan proceedings. On both occasions, the request was firmly denied by the Tribunal of Milan.”

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