Nigerian Lawmakers Want Shell, Eni Oil Award Revoked

July 22, 2013

Nigeria should revoke oil rights for which Royal Dutch Shell Plc (RDSA) and Eni SpA (ENI) paid $1.1 billion, a parliamentary committee said, alleging that the acquisition process was “highly flawed.”

Shell and Eni jointly bought Oil Prospecting License 245 from Malabu Oil & Gas Ltd., controlled by Dan Etete, a former oil minister, in 2011. Located in the deep offshore waters of the Gulf of Guinea, it is estimated to hold at least 9 billion barrels of crude reserves worth $1 trillion, according to a probe report by a House of Representatives committee filed as a public record and provided to Bloomberg yesterday.

“Unfortunately our national interest, knowingly or unknowingly, was ceded away to the two oil majors,” the committee said. The sale violates a law to promote increased Nigerian ownership of oil assets by giving foreign companies 100 percent ownership as well as the country’s tax regulations, the report said, alleging a “lack of transparency and full disclosure” by Shell in acquiring the license.

Nigeria is Africa’s largest oil producer, with Shell, Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), Total SA (FP) and Eni running joint ventures with state-owned Nigerian National Petroleum Corp. that pump more than 90 percent of the country’s oil. The West African nation produced 1.83 million barrels a day of oil in June, according to data compiled by Bloomberg.

Copyright: Bloomberg, 2013.