Giusy Barbara, an Italian judge, says oil giants Eni and Shell were fully aware that their 2011 purchase of OPL 245 would be embroiled in corruption.

According to Reuters,  the judge made the comment on Monday, backed by evidence which she said led to the conviction of Emeka Obi, a Nigerian and Gianluca Di Nardo, an Italian, in September.

Both were said to be middlemen in the controversial OPL 245 deal.

“The management of oil companies Eni and Shell … were fully aware of the fact that part of the $1.092 billion paid would have been used to compensate Nigerian public officials who had a role in this matter and who were circling their prey like hungry sharks,” the judge said in her reasoning.

Eni and Shell bought the OPL 245 offshore field for about $1.3 billion in what is perhaps one of the largest corruption scandals.

It is alleged that about $1.1 billion of the total was siphoned to agents and middlemen.

On Wednesday, the federal government filed a lawsuit against the oil companies in London to the tune of $1.1 billion.

While Eni said it would analyse Giusy’s comments, a Shell spokesperson has distanced the company from the middlemen convicted and other corruption allegations.

“Neither Emeka Obi nor Gianluca di Nardo worked on behalf of Shell and we were not a party to their fast-track trial. We are reviewing the written decision of the fast track trial judge, so it would not be appropriate to comment on the detail at this stage,” a statement by Shell read.

“Based on our review of the Prosecutor of Milan’s file and all of the information and facts available to us, we do not believe that there is a basis to convict Shell or any of its former employees of alleged offences related to Oil Prospecting Licence (OPL) 245 in Nigeria.

“Shell attaches the greatest importance to business integrity. It’s one of our core values and is a central tenet of the Business Principles that govern the way we do business.

“Shell has clear rules on anti-bribery and corruption and these are included in our Code of Conduct for all staff. There is no place for bribery or corruption in our company.”

Emmanuel Ibe Kachikwu, minister of state for petroleum resources, says the country will continue to struggle with fuel scarcity if it continues to subsidise petroleum products.

The junior minister made this statement on Thursday at a programme organised by the Nigerian National Petroleum Corporation (NNPC) to celebrate its achievements in three years and honour its staff.

“In the midstream and downstream sector, we have struggled. I’d love to see a day when there will be no fuel scarcity in this country but for that to happen, there are certain realities whether we want to accept the facts or not,” he said.

“The liberalisation of the sector is going to be a panacea for being able to solve this. As long as we continue to subsidise products, create very market unfriendly type taxes, we are going to continue to struggle.

“So we need to find a way that we meet the needs to provide products sufficiently for the populace and at the same time free the sector to grow.”

Speaking further, Kachikwu said the NNPC is already deliberating on the terms for the refurbishment of the four refineries.

“Investments are lacking in this sector, we’ve been working on trying to rebuild the four refineries. We got approval from the president in January 2016. NNPC has struggled in terms of finding the financials. Financials have finally been found but to find the terms have been difficult.

“We are having a meeting on this tomorrow and I am hoping that by end of this year, end of first quarter next year, we would have completed the commercial aspect of this financial undertaking and finally, we’ll be able to allow private sector collaborate with NNPC and repair these refineries and bring back 450,000 barrel capacity refinery back into shape. That is going to be the solution, one of the first solution to solving the fuel crisis.”

On Sunday, the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) had threatened to suspend operations if outstanding subsidy claims were not paid.

The shutdown directive was suspended on Monday when marketers agreed to give the federal government a five-day grace to pay the first tranche.

The federal government has filed a $1.1 billion suit against Royal Dutch Shell Plc, Eni and other companies for a 2011 Malabu oil deal saying it was tainted with corruption.

Reuters reports that the suit which was filed on Wednesday in London said the money paid by the companies was diverted to bribes and kickbacks.

The oil field is already the subject of an ongoing trial in Milan, where prosecutors claim that bribes totalling $1.1 billion were paid.

“It is alleged that purchase monies purportedly paid to the Federal Republic of Nigeria were in fact immediately paid through to a company controlled by Dan Etete, formerly the Nigerian minister of petroleum, and used for, amongst other things, bribes and kickbacks,” a statement released by the federal government on Thursday read.

“Accordingly, it is alleged that Shell and Eni engaged in bribery and unlawful conspiracy to harm the Federal Republic of Nigeria and that they dishonestly assisted corrupt Nigerian government officials.”

According to the filing papers, the federal said JP Morgan acted with gross negligence when it allowed funds paid for the oil field’s license be transferred to a company controlled by Dan Etete, a former minister of petroleum resources.

“If the defendant acted with reasonable care and skill and/or conducted reasonable due diligence it would or should have known or at least suspected … that it was being asked to transfer funds to third parties who were seeking to misappropriate the funds from the claimant and/or that there was a significant risk that this was the case.”

The ongoing trial in Milan has already found two middlemen guilty for their ” complicity in a bribery scandal”.

Nigeria’s oil production will reduce further in the coming months as exemptions granted from Organisation of Petroleum Exporting Countries (OPEC) production cuts has ceased.

The oil cartel and its allies, led by Russia, agreed to cut oil production by 1.2 million barrels per day (bpd) at their 5th ministerial meeting in Vienna on December 7.

Beginning from January 2019, OPEC members will reduce production by 800,000 bpd or 2.5 percent of the total amount, while non-OPEC producing countries will cut production by 400,000 bpd or 2.0 percent.

The move, according to OPEC, was “following deliberations on the immediate oil market prospects and in view of a growing imbalance between global oil supply and demand in 2019”.

Nigeria and Libya had been exempted from the supply cuts when the deal went into effect in January 2017, due to internal unrest and other peculiarities that affected their oil infrastructure.

But with the new deal, Saudi Arabia, the largest producer in the cartel will absorb the highest cut, while Nigeria which currently produces an average of 1.7 million bpd will reduce output by some 40,000 bpd.

In an interview with Bloomberg before the OPEC meeting, Ibe Kachikwu, minister of state for petroleum resources, said Nigeria will struggle to participate in the supply cut.

“Some countries will struggle because their economies are very constrained” and Nigeria itself could only manage a small cut,” he said.

“It is very difficult to do that but where we are now, everybody must be seen to contribute. Obviously, the smaller it is, the more amenable we are to participate; the larger it is, the more we will struggle to participate.

“We have got exemption three times understandably. This time around, I think there is a decision that everybody should be seen to chip in.”

Reduced oil output and its effect on the economy

The OPEC production cut comes at a time when oil production has been projected to hit 2.2 million bpd by early 2019 when the 200,000 bpd Egina field comes on stream in the same period.

Considering the federal government’s 2018 budget benchmark of 2.3 million bpd (including condensates), to operate within the OPEC limit and still achieve its target, Nigeria would need to produce at least 640,000 bpd of condensates.

Although supply disruptions caused by militant activities in the oil-rich Niger-Delta have reduced considerably from what was recorded in 2016, production capacity has been unstable.

The nation’s ailing refineries which have been operating below capacity and uncertainties in the passage of the Petroleum Industry Governance Bill (PIGB) has been linked closely to reduced investment in the oil and gas sector as a whole.

A consistent reduction in production volumes as a result of OPEC cuts would, therefore, affect government revenue, and in turn, affect budget implementation.

Also, being that oil remains Nigeria’s largest source of foreign exchange, any shortfall in production would impact the economy negatively, akin to the recession experienced in 2016.

Hence, if production volumes fall below the budget benchmark coupled with a reduction in oil prices, this could place Nigeria in the trenches.

The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has directed its members to shut down all loading operations by midnight.

The association gave the directive in a statement released on Sunday and signed by Olufemi Adewole, its executive secretary.

According to the statement, oil marketers have disengaged their staff due to inability to pay salaries.

“The Association took a bold step to stop the financial hemorrhaging of its members by the painful disengagement of its loyal workers after over 3 years of engaging with the Federal Government in the efforts to secure the payment of all subsidy induced debt owed marketers,” the statement read.

“To avoid owing staff without any hope of pay, it is hereby agreed that since all our staff have been disengaged, ALL DAPPMAN Member depot are not in a position to operate hence WILL SHUT DOWN ALL LOADINGS AT MIDNIGHT, Sunday, December 9.”

The ministry of finance had announced that it had reached an agreement with by the painful disengageoil marketers on how to pay the outstanding subsidy claims.

However, DAPPMAN denied reaching an agreement with the government because it failed to agree to demands that the claims should be paid in cash instead of using promissory notes.

A statement released on Saturday by Henry Ikem-Obih, chief operating officer, Nigerian National Petroleum Corporation (NNPC) downstream, had assured that the Debt Management Office would pay N236 billion out of the N348 billion approved by the national assembly as outstanding subsidy claims on Friday.

The federal government says oil marketers would be paid N236 billion out of N348 billion approved by the national assembly as outstanding subsidy claims on Friday, December 14.

Henry Ikem-Obih, the chief operating officer, Nigerian National Petroleum Corporation (NNPC) downstream, made this known on Saturday.

“The Debt Management Office (DMO) will by next week, precisely on Dec. 14th, pay oil marketers first part of the subsidy arrears of N236 billion as agreed by both parties,” he said.

“We agreed that after the first tranche is paid, the marketers will form a committee to work on details of how the next tranche will be paid in 2019 and the last paid in 2020.

“Government is fully committed to paying the first tranche as promised and will be paid through promissory note that will be issued by the DMO.”

According to Ikem-Obih, the debt owed the government by oil marketers will not be deducted from the first tranche.

He said it was unfortunate that the Depot and Petroleum Product Marketers Association of Nigeria (DAPPMAN) is making a contrary statement to the agreement reached on Thursday at the ministry of finance.

There had been a meeting at the ministry where an agreement was said to have been reached on how to pay outstanding subsidy claims to marketers.

DAPPMAN issued a counter-statement saying that there was no agreement reached with the government because it failed to reach legitimate demands of the association which was that the claims should be paid in cash instead of through the promissory notes.

He said that Independent Marketers Association, DAPPMAN, Major Oil Marketers (MOMAN), CBN, PPPRA, among others were part of the meeting.

Ikem-Obih urged Nigerians not to panic as the NNPC and all other stakeholders will ensure that there was no scarcity of the product throughout the yuletide season.

He said that apart from imported products, the Warri refinery had on Thursday started refining products and the Port Harcourt Refinery would soon kick off refining.

President Muhammadu Buhari has promised to sign the petroleum industry bill (PIB) once it is transmitted to him.

Speaking in Abuja on Thursday at the 40th anniversary of the National Union of Petroleum and Natural Gas Workers (NUPENG), the president said he is a worker-friendly president.

Buhari was represented by Chris Ngige, the minister of labour and employment, urged the workers to support his administration towards ensuring better welfare for workers.

The theme of the anniversary is, “Nigeria Oil and Gas Workers; Yesterday, Today and Tomorrow,”.

“(I am) a worker-friendly president who is concerned about better working conditions for workers,” he said.

“(I) respect the rule of law and the law of the land. (I) promise to sign the Petroleum Industry Governance Bill once it is brought to (me).”

In his address, Williams Akporeha, NUPENG president, said there is a wrong perception about the union.

“The enormous challenges confronting our union, most especially with regards to the employers, government and general public perception of our enormous powers, influence and ever constant solidarity,” he said.

“We know that most often many employers are scared of relating with us and this wrong perception is sometimes responsible for the hostile attitude to our efforts in organising their employees.

“In the light of this realisation, our administration will embark on massive public image polishing and mending relationship with all aggrieved stakeholders.

“We pledge to be more cooperative and collaborative in our dealings but without compromising on the best interest of our members and global labour best practices.

“We have further resolved to be more open and engaging in social dialogue with all stakeholders.

“We urge everyone, government, employers and the public to know that we are fully committed to rendering efficient, effective and public/stakeholders friendly services to our dear country and its citizens.”

The president had refused to sign the petroleum industry governance bill for ‘legal and constitutional reasons’.

Khalid al-Falih, Saudi Arabia’s energy minister, says some members of the Organisation of Petroleum Exporting Countries (OPEC) have been complaining that Libya and Nigeria are overproducing.

“We have seen a great deal of stability and consistency, both operationally and, more importantly, in terms of security and bringing the sector back to normal,” Falih said after meeting Ibe Kachikwu, minister of state for petroleum resources.

S&P Global Platts reports that Nigeria and Libya would be asked to accept a production cut quota if OPEC can reach a new supply accord at the meeting holding in Vienna on Thursday.

At a December 2016 meeting, OPEC members had agreed to a production cut to battle a supply glut that saw oil prices drop to $25 per barrel. Nigeria and Libya had been exempted from the cuts on the grounds of internal crisis.

The current 1.8 million barrels per day production cut will expire in December.

“We are hopeful that they will come around this time and understand that everyone has to cut together,” an OPEC delegate said, asking not to be named.

The delegate said both countries had made significant production output since the current deal went into force in January 2017, and it was time for them to “contribute”.

Saudi energy minister Khalid al-Falih, OPEC’s de-facto leader, has in recent weeks travelled to Libya and Nigeria to press them on the exemptions, though no public commitments have been announced.

Samsung Heavy Industries Nigeria Limited (SHIN) says it did not receive $214 million from Total for the construction of a fabrication yard at Lagos Deep Offshore Logistics (LADOL) Island.

In a letter sent by its representatives to TheCable Petrobarometer, the Korean company said the payments made to SHIN were part of the Egina floating production storage offloading (FPSO) contract price.

Samsung also claimed that it was awarded the contract as a Nigerian company, adding that LADOL is merely a shareholder of Samsung Heavy Industries Mega Construction and Integration Free-Zone (SHI MCI FZE) partnership.

TheCable had earlier reported that there is an ongoing arbitration case in a London court over the costs allegedly incurred by SHIN during the construction of the Egina FPSO.

Samsung was awarded a contract in 2010 to construct an FPSO for Nigeria’s Egina deepwater oilfield which has oil deposits in excess of 550 million barrels.

“Total did not pay Samsung $214 million for the construction of the fabrication yard,” the letter read.

“Total has consistently stated (including at the February 2018 Senate Inquiry) that it has made no investment in the fabrication yard, and that all payments to SHIN under the Egina FPSO Contract were part of the lump sum contract price.

“LADOL was not “forced” to reduce its interest in SHI-MCI FZE, but voluntarily entered into a revised Joint Venture agreement with SHIN after failing to make the agreed capital contributions relevant to its shareholding under the original Joint Venture agreement.”

The letter confirms the existence of an arbitration, which it describes as “confidential”, adding that information about the payments made by Total to Samsung “in connection with their dispute” is also “commercially confidential”.

Most of the facts and allegations reported by TheCable Petrobarometer were from the certified court papers and correspondences originated by Samsung.

In the past, all attempts by TheCable to seek clarifications from Samsung had been futile, with calls and texts to 08033436889, said to be the number of the head of communications, going unanswered.

The crisis of confidence between Samsung and LADOL, which partnered to build the $3.3 billion Egina vessel, has remained unsolved after several court cases and promises by the federal government to help make peace.

The Nigerian National Petroleum Corporation (NNPC) says it couldn’t allow continued attacks on the Trans Forcados pipeline hence the security contract it awarded to Ocean Marine Solutions (OMS).

Ocean Marine Solutions is owned by Idahosa Okunbo, a Nigerian businessman, whom Adams Oshiomole, chairman of the All Progressives Congress (APC), referred to as his friend in a 2016 letter to Ize Iyamu.

In a statement released on Tuesday by the corporation and signed by Ndu Ughamadu, its spokesman, NNPC said the contract is the result of a rigorous appraisal of OMS’s record of performance on the Bonny-Port Harcourt and Warri-Escravos crude evacuation lines.

Trans Forcados is an 87km pipeline with a capacity of 250,000 barrels.

“In 2018, we lost over 60 days of production due to incessant breaches on the TFP despite having a security contract in place,” the statement read.

“In terms of production numbers, this translates to over 11 million barrels of crude oil which on face value equates to over $800m in lost revenue to all the stakeholders in the matrix which includes: NNPC, its Joint Venture partners and the Nigerian Federation.”

Ughamadu said the contract would require that the company bear the cost of any damage to the pipeline, unlike the former contract where the company was exempted from repair costs.

NNPC said it lost 60 days of production under the new contract and spent $32 million on repairs and protection of the pipeline.

According to NNPC, OMS is obligated to engage youths from the community to execute the contract hence youths engaged under the old contract do not have to fear losing their jobs.

On the allegation of non-adherence to due process in the offer of the surveillance deal, NNPC explained that all federal government-approved procurement processes and procedures were followed to the letter.

In 2015, a memo from the Presidency had directed that ex-militants, led by Government Ekpemupolo (aka Tompolo), Mujaheedin Asari-Dokubo and Chief Bipobiri Ajube (aka Gen. Shoot-At-Sight) take over Nigerian waterways and oil pipeline protection from the police and the Nigerian Security and Civil Defence Corps (NSCDC) as from March 16.

Frederick Fasheun, deceased founder of the Oodua Peoples Congress, and Gani Adams were also beneficiaries of the contract.