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A court in Milan is considering charges of corruption against Eni and Shell in a controversial oil deal that led to Nigeria losing an estimated $6bn.

The campaign group Global Witness has calculated the OPL 245 deal in 2011 deprived Nigeria of double its annual education and healthcare budget.

Eni and Shell are accused of knowing the money they paid to Nigeria would be used for bribes.

The Italian and Anglo-Dutch energy giants deny any wrongdoing.

This unfolding scandal, which is being played out in an Italian court, has involved former MI6 officers, the FBI, a former President of Nigeria, as well as current and former senior executives at the two oil companies.

The 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.

Image copyright Getty Images Image caption Shell is one of the oil firms facing corruption charges

Global Witness has 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 has 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 could amount to $5.86bn, compared to terms in place before 2011.

The analysis was carried out by Resources for Development Consulting on behalf of Global Witness, as well as the NGOs HEDA, RE:Common and The Corner. The estimated losses were calculated using an oil price of $70 a barrel as a basis.

Eni has criticised the way it was calculated because it ignores the possibility that Nigeria had the right to revise the deal to claim a 50% share of the production revenues.

Deal or no deal

Campaigners say the deal should be cancelled.

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

"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."

Nigeria is the richest economy in Africa, but despite having large resources of oil and gas millions of people are poor.

Image copyright Getty Images Image caption Campaigners say the deal deprived Nigeria of double its annual education and healthcare budget

Lucrative OPL 245

It is understandable why Eni and Shell wanted to acquire the rights to develop OPL 245, because it is estimated to contain nine billion barrels of oil.

But the process of how they secured the contract is dogged by claims of corruption.

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

He is accused of paying bribes to others in the government, such as former President Goodluck Jonathan, 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," says Ava Lee from Global Witness.

Image copyright Getty Images Image caption Eni's headquarters in San Donato Milanese, near Milan

No wrongdoing

The Anglo-Dutch and Italian energy giants insist they have done nothing wrong, because they paid the money to secure the exploration rights directly to the Nigerian government.

Shell issued a statement to BBC World Business Report saying: "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 Italian oil and gas company said "as this matter is currently before the Tribunal of Milan, we are unable to comment in detail".

In a statement it noted: "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."

Eni also said it "continues to reject any allegation of impropriety or irregularity in connection with this transaction".

Biggest ever corruption case

Campaigners believe this is a landmark case and the outcome of the trial in Milan will cause an earthquake to reverberate through the oil and gas industry.

Nigeria's leader is being encouraged to intervene by Olanrewaju Suraju, from HEDA. "President Buhari should reject any deal," he said.

The contrast between the way Italy deals with migrants and the actions of one of the nation's biggest companies has been raised by Antonio Tricarico of Re;Common.

"The Italian government is discouraging Nigerian migrants trying to reach Italy by claiming that it will help them at home, but Italy's biggest multi-national, part owned by the state, is accused of scamming billions from the Nigerian people."

The outcome of the unprecedented court case in Milan could force the oil industry to change how it conducts its business, especially in countries where corruption is rife, because more transparency about contracts and payments made would discourage fraud.</s>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, double the country’s annual budget for education and health.

Global Witness 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 has 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.

BBC reported that the analysis was carried out by Resources for Development Consulting on behalf of Global Witness.

The estimated losses were calculated using an oil price of $70 per barrel as a basis.

However, Eni has 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, adding,”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.”

A court in Milan is considering charges of corruption against Eni and Shell in the controversial oil deal.

Eni and Shell are accused of knowing the money they paid to Nigeria would be used for bribes.

The Italian and Anglo-Dutch energy giants deny any wrongdoing.

This unfolding scandal, which is being played out in an Italian court, has involved former MI6 officers, the FBI, a former President of Nigeria, as well as current and former senior executives at the two oil companies.

The 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.

It is understandable why Eni and Shell wanted to acquire the rights to develop OPL 245, because it is estimated to contain nine billion barrels of oil.

But the process of how they secured the contract is dogged by claims of corruption.

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

He is 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.

The Anglo-Dutch and Italian energy giants insist they have done nothing wrong, because they paid the money to secure the exploration rights directly to the Nigerian government.

Shell issued a statement to BBC World Business Report saying: “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 Italian oil and gas company said “as this matter is currently before the Tribunal of Milan, we are unable to comment in detail”.

In a statement it noted: “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.”

Eni also said it “continues to reject any allegation of impropriety or irregularity in connection with this transaction”.

Nigeria’s leader is being encouraged to intervene by Olanrewaju Suraju, from HEDA. “President Buhari should reject any deal,” he said.

The outcome of the unprecedented court case in Milan could force the oil industry to change how it conducts its business, especially in countries where corruption is rife, because more transparency about contracts and payments made would discourage fraud.</s>Lagos / with Agency Report – A court in Milan is considering charges of corruption against Eni and Shell in a controversial oil deal that led to Nigeria losing an estimated $6 billion.

Already, a campaign group, Global Witness, has calculated that the OPL 245 deal in 2011 deprived Nigeria of double its annual education and healthcare budget.

Eni and Shell are accused of knowing the money they paid to Nigeria would be used for bribes. The Italian and Anglo-Dutch energy giants deny any wrongdoing.

The scandal has involved former MI6 officers, the FBI, a former President of Nigeria, as well as current and former senior executives at the two oil companies.

But the erstwhile Nigerian president has since denied any involvement in the Malabu oil deal.

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

Global Witness has 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 has 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 could amount to $5.86 billion, compared to terms in place before 2011.

The analysis was carried out by Resources for Development Consulting on behalf of Global Witness, as well as the NGOs HEDA, Re: Common and The Corner. The estimated losses were calculated using an oil price of $70 a barrel as a basis.

Eni has faulted the way it was calculated because it ignores the possibility that Nigeria had the right to revise the deal to claim a 50% share of the production revenues.

But the campaigners were persistent on the need for the deal to be cancelled.

“We discovered that Shell had constructed a deal that cut Nigeria out of their share of profit of oil from the block,” Ava Lee, a campaigner at Global Witness said.

“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.”

It is understandable why Eni and Shell wanted to acquire the rights to develop OPL 245, because it is estimated to contain nine billion barrels of oil.

But the process of how they secured the contract is dogged by claims of corruption.

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

He is accused of paying bribes to others in the government, such as former President Goodluck Jonathan, to ensure that the process went smoothly.

Shell and Eni are accused of knowing the $1.1 billion 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,” says Ava Lee from Global Witness.

The Anglo-Dutch and Italian energy giants insist they have done nothing wrong, because they paid the money to secure the exploration rights directly to the Nigerian government.

Shell said in a statement: “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.”

Denying any wrongdoing, Eni questioned 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 Italian oil and gas company said “as this matter is currently before the Tribunal of Milan, we are unable to comment in detail”.

In a statement, it noted: “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.”

Eni also said it “continues to reject any allegation of impropriety or irregularity in connection with this transaction”.

Campaigners believe this is a landmark case and the outcome of the trial in Milan will cause an earthquake to reverberate through the oil and gas industry.

Nick Hildyard of the Corner House wonders if investors are comfortable. “Fund managers should be alarmed at this brazen dishonesty,” he said.

Nigeria’s leader is being encouraged to intervene by Olanrewaju Suraju, from HEDA. “President Buhari should reject any deal,” he said.

The contrast between the way Italy deals with migrants and the actions of one of the nation’s biggest companies has been raised by Antonio Tricarico of Re: Common.

“The Italian government is discouraging Nigerian migrants trying to reach Italy by claiming that it will help them at home, but Italy’s biggest multi-national, part owned by the state, is accused of scamming billions from the Nigerian people.”

The outcome of the unprecedented court case in Milan could force the oil industry to change how it conducts its business, especially in countries where corruption is rife, because more transparency about contracts and payments made would discourage fraud.

But stakeholders who spoke with our correspondent on Monday expressed discontent about the sleaze being perpetrated in the nation’s oil and gas sector, saying the development was counterproductive to its growth.

They urged the Federal Government to get to the conclusion of the matter and design a stringent mechanism to free the sector from graft.

In May of 2012, Global Witness published a statement detailing agreement by Nigerian subsidiaries of Shell and ENI to pay the Nigerian government US$1,092,040,000 to acquire the offshore oil block OPL 245.

The Nigerian government had also consented to pay the exact sum to Malabu Oil and Gas, a company generally reported as controlled by Dan Etete, a petroleum minister during the Abacha era.

The two international oil companies (IOCs) deny having any agreements with Malabu, but with the Nigerian government.

Nigeria’s former Minister of Justice, Mohammed Bello Adoke, however, stated in an interview that, “SNUD (A Royal Dutch Shell subsidiary in Nigeria) and ENI agreed to pay Malabu through the Federal Government acting as an obligor, the sum of US$1,092,040,000 in full and final settlement of any and all claims, interests or rights relating to or in connection with Block 245.”

Reports corroborated the former minister’s claim, as it revealed that former President Goodluck Jonathan’s administration instructed the release of almost 80% of the funds paid for OPL 245 (US$801,540,000) to accounts controlled by Malabu.

The funds were subsequently shared through convoluted structures to certain companies and individuals.

Last year, Abubakar Malami, Attorney-General of the Federation and Minister of Justice, in a letter dated September 27, 2017 and addressed to President Muhammadu Buhari, said should Nigeria pursue the resolution of the Malabu oil deal that has dragged for years legally, the country stood a clear chance of losing.

He said the entire Malabu story clearly indicated that there were the civil and criminal aspects to the case. The civil aspect bothers on the skirmishes between the directors of the company which led to the claims that shares of the same directors were divested without their consent thereby taking over their interest.

He added that in the criminal case, the aggrieved parties through their lawyers petitioned the EFCC against some directors of Malabu Oil and Gas, alleging fraudulent divestment of their shares and subsequently depriving them of their benefits in the sale of OPL 245.</s>Nigeria lost an estimated $6 billion to the controversial deepwater block Oil Prospecting Licence (OPL) 245 deal, a new analysis from world-class oil experts revealed.

The projected lost revenue, according to analysts could fund Nigeria’s combined annual federal health and education budgets twice over.

This was made known on Monday, November 26, 2018, during a presentation of an analysis jointly inaugurated by the Human and Environmental Development Agency, Global Witness, RE: Common and The Corner House.

Industry experts at the Resources for Development Consulting, a research-focused organisation conducted the analysis.

ALSO READ: How Nigeria wasted $1 trillion during five major oil booms - Report

According to the report, leaked documents from Shell had suggested the oil giant capitalised on the 2011 presidential election to get the federal government to sign the deal.

Shell and Eni have denied any wrongdoing, reiterating that they had acted correctly in the purchase of OPL 245.

The two oil giant along with a number of their senior executives have involved in lawsuits for their alleged role in the deal.

The Resources for Development Consulting projected that Nigeria lost an estimated $4.5 billion based on 2003 fiscal terms on the deal.

Projecting further, they said the federal government lost N5.86 billion over the lifetime of the project based on 2005 fiscal terms.

The firm used a discounted cash flow analysis model made up of elements including fiscal terms, field data from various sources, an oil price assumption of $70 a barrel to arrived at the figure.

Don Hubert, founder and president of Resources for Development Consulting, said the fiscal terms governing the OPL 245 deal only favoured Shell and Eni.

“The payment of $1.1 billion dollars in 2011 was not only a payment to secure rights to OPL 245, but the payment also served fiscal terms that were highly generous to the IOCs (International Oil Companies) but were highly detrimental to the government of Nigeria,” he said.

“The lack of profit oil in the current fiscal terms that is governing OPL 245 will result, our analysis shows, in a loss to the Nigerian people of at least $4.5 billion.”

Barnaby Pace from Global Witness said the report shows how the terms of the agreement were in the favour of the two oil giants. Pace said globally there is call on the Nigerian government to revoke the licence so that its estimated $6 billion losses will be stopped in its track. "We also call for contracts to be made public.”

ALSO READ: 5 things you should know about Malabu Oil deal and JP Morgan’s involvement

In August 2018, a Milan court sentenced Nigerian man, Emeka Obi and an Italian middleman to four-year jail terms over $1.1 billion Malabu oil fraud. Shell and Eni denied the two 'middlemen'.

The two international oil and giants - Royal Dutch Shell and Italian Agip-Eni - paid out about $1.1 billion to Dan Etete, Nigeria's former petroleum minister who had previously been convicted of money laundering in France.

The payment and oil deal became a subject investigation and several Nigerian government officials were believed to have received several million dollars in bribes for the enabling roles they played.

Nigeria’s OPL 245 is one of the biggest sources of untapped oil reserves on the African continent with reserves estimated at 9 billion barrels.</s>Nigeria will lose an estimated $6 billion in revenue to international oil companies, Shell and Eni, over the deal on the controversial oil block, widely known as Oil Prospecting License (OPL) 245.

 

 icirnigeria.org reported the new findings quoting a report by Global Witness called Take The Future.

According to icir.org, leaked emails and confidential documents also showed that the oil giants might have used unethical means to secure the deal as they altered earlier terms on the oil block with the intention of depriving Nigeria billions of dollars of future revenue while raking in huge profits.

The report draws on an analysis from leading experts at Resources for Development Consulting commissioned by Global Witness and NGOs HEDA, RE:Common and The Corner House.

Two weeks before the deal was signed in 2011, Andrew Obaje, then Director of Department of Petroleum Resources advised the Federal Government not to accept the deal because it was bad.

Obaje’s advice was in response to Mohammed Adoke, the then Minister of Justice and Attorney General of Federation who sought his comment on the agreement underpinning the disputed oil block.

Obaje concluded in the letter that “the resolution agreement as proposed is highly prejudicial to the interests of the Federal Government, more so when there is considerable leverage on the part of the FGN irrespective of the outcome of the arbitration. Government should therefore re-evaluate the proposal with a view to securing for the FGN a more advantageous outcome from any resolution of the matter.”

Rather than follow Obaje’s recommendation, the Federal Government went ahead to approve the deal that stripped it of earlier favourable terms.

The deal excluded Shell and Eni from paying royalty and Profit Oil on the OPL 245 which were part of the fiscal terms that were contained in the earlier contractual agreement with the oil companies in 2003 and 2005.

Assuming that oil price remains at $70 per barrel, Nigeria loses $5.86 billion projected revenue over the lifetime of the oil block when compared to earlier terms that had applied before the 2011 deal.

Barnaby Pace from Global Witness said “Shell and Eni execs set the deal up so that Nigeria would earn some $6bn less than it could have. This scandalous deal must be cancelled.”

Reacting to the analysis by Global Witness, Eni and Shell denied any wrongdoing. Erika Mandraffino, Eni’s Senior Vice President, Global Media Relations and Crisis Communication, questioned the methodology of the analysis.

“We note that Global Witness draws conclusions on the appropriateness of Eni’s and its partner’s transaction and on the legitimacy of Eni’s conduct by referring to analyses carried out by unnamed partners whose competence or expertise is not substantiated in your letter,” Mandraffino wrote

“We can understand that your organisation, which is not engaged in business activities in the oil and gas sector, may not be best placed to assess the input, methodology and overall quality of such analyses and come to incorrect conclusions. In this respect, let us just note that the technical and contractual assumptions adopted as basis for the analysis appear to be partial and inaccurate, if not misleading.”

The assessment of the impact of different fiscal terms for government revenues from OPL 245 was carried out by Resources for Development Consulting whose responsibility is to assist resource-rich countries in securing a fair share of mining, oil, and gas revenues by analysing fiscal regimes, preparing revenue forecasts, assessing vulnerability to tax avoidance, and supporting cost monitoring and auditing.

To do the analysis, Resources for Development Consulting pointed out that it used discounted cash flow modelling which is an industry-standard methodology used for valuation by oil companies and for revenue forecasting by governments.

“The field data contained in this analysis comes predominantly from the companies themselves: Shell and Eni. The basic field data comes from a 2006 Valuation document prepared by Shell in support of arbitration proceedings. This data has been updated based on information from subsequent Shell reports and information published by Eni in 2011 as well as public domain sources from analogous blocks in neighbouring countries.” the consulting firm wrote in its report.

It is inexplicable how Mohammed Adoke, then Attorney General of the Federation led the Federal Government to agree to the deal that altered the terms of the agreement in favour of the oil companies against the position of Department of Petroleum Resources.

In response to the analysis’ findings, Adoke stressed that the deal was concluded following consultations with relevant ministries, adding that no attempt was made to prevent civil servants from voicing their concerns.

He said the issues were resolved following inter-ministerial discussions. He said that the production sharing agreement between Shell and Eni was not within his remit.

The OPL 245, which covers nearly 2,000 square kilometres in the southern edge of the Niger Delta in water depths of more than 1,200 meters, was first allocated in 1998.

The then Minister of Petroleum, Dan Etete allocated the oil block to Malabu Oil and Gas Limited, an indigenous company owned by him.

In 2001, Malabu offered Shell 40 per cent stake in the oil block. However, Malabu’s licence was later revoked by the Federal Government. The Nigeria National Petroleum Corporation (NNPC) later offered the block for bid which Shell won.

The NNPC in 2003 signed a production sharing contract (PSC) with Shell on the oil block. But Malabu went to court to restore its ownership of the oil block. Malabu’s right to the oil block was restored in 2006 by the court.

Then Shell disagreed on the restoration of the oil block to Malabu and in 2007 instituted proceedings against the Federal Government at the International Centre for Settlement of Investment Disputes, seeking full restitution of its rights as set out in the 2003 production sharing agreement.

In 2011, a deal was reached for Shell and Eni to pay $1.1 billion to the Federal Government and Malabu to have full ownership of the oil block, a deal that has been trailed with bribery scandal.

Shell and Eni are currently facing bribery charges over the OPL 245 deal in a landmark trial in Italy, the first time a company as large as Shell or such senior executives of a major oil company have ever stood trial for bribery offences.

Eni’s current CEO Claudio Descalzi, and former Royal Dutch Shell Executive Director for Upstream, Malcolm Brinded CBE are facing charges of bribery and corruption over the oil block in the trial that began in Milan in September.

According to Global Witness, the case brought by the Milan Public Prosecutor alleges that $520 million from the deal was converted into cash and intended to be paid to then former President Goodluck Jonathan and other Nigerian government officials. The prosecutors further allege that money was also channelled to Eni and Shell executives, with $50 million in cash delivered to the home of Eni’s then head of African Operations Roberto Casula.

Two middlemen in the OPL 245 deal have already been sentenced to four years imprisonment, as well as confiscations of over €100 million by the Italian court. The offenders, Emeka Obi (Nigerian) and Gianluca Di Nardo (Italian) were found guilty of corrupt offences over the oil block.</s>A court in Milan is considering charges of corruption against Eni and Shell in a controversial oil deal that led to Nigeria losing an estimated $6bn.The campaign group Global Witness has calculated the OPL 245 deal in 2011 deprived Nigeria of double its annual education and healthcare budget......Read more via Nairaland – https://ift.tt/2SdHIL4 Get more: Nigeria Business News</s>A court in Milan is considering charges of corruption against Eni and Shell in a controversial oil deal that led to Nigeria losing an estimated $6bn.

The campaign group Global Witness has calculated the OPL 245 deal in 2011 deprived Nigeria of double its annual education and healthcare budget.

Eni and Shell are accused of knowing the money they paid to Nigeria would be used for bribes.

The Italian and Anglo-Dutch energy giants deny any wrongdoing.

This unfolding scandal, which is being played out in an Italian court, has involved former MI6 officers, the FBI, a former President of Nigeria, as well as current and former senior executives at the two oil companies.

The 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.

Global Witness has spent years investigating the deal which gave Shell and Eni the rights to explore OPL 245, an offshore oil field in the Niger Delta.</s>PRETORIA - A court in Milan is considering charges against oil multinationals Eni and Shell for allegedly defrauding Nigeria of $6 billion in petroleum revenue.

The oil companies say they’re innocent in what could become one of the biggest corruption cases in history.

The corruption, conflict and environmental abuse watchdog Global Witness says Eni and Shell knew full well that their payments securing exploration rights to the Nigerian Block 245 seven years ago would stick to corrupt fingers.

The court is looking at evidence that in order to secure exploration rights, the oil companies altered earlier contractual terms, depriving Nigeria of billions in revenue.

Global Witness reckons the amount stolen would pay for twice the Nigerian giant’s annual education and health care budget.</s>The Nigerian government is expected to lose an estimated $ 6 billion because of corruption in the sale of the Oil Prospecting Licence (OPL) 245 to Shell and Eni Oil in 2011.

The Oil field 245 said to be one of the largest in the world is being extracted by the two oil companies despite corruption allegations and charges in courts both in Italy and Nigeria.

A report released on Monday by Global Witness, ‘Take The Future: Shell’s Scandalous Deal For Nigeria’s Oil,’ investigates the deal and its shortfalls.

It states that a new analysis of the deal shows it included generous terms that deprive the Nigerian people of $6 billion potential revenue.

“The deal for the OPL 245 licence includes previously unreported terms that left Nigeria without share of profit from oil produced to which it was entitled from the block, resulting in an historical poor deal for Nigeria,” the report stated.

It said the deal hid huge generous fiscal terms for the companies. The deal between Shell, Eni, Nigerian government officials and Malibu Oil and Gas called for a Production Sharing Agreement (PSA) to be signed between only Shell and Eni subsidiaries.

The report noted that this departs from the standard procedure of a production sharing contract (PSC) that is agreed between the contractor and the state.

It noted that the exclusion of the Nigeria State from the PSA resulted in the removal of a central feature of production sharing contract that is a proportion of the oil produced known as ‘profit sharing’ is allocated to the government.

Global Witness also said Shell knew their billion dollar payment for the deal was going not into the public purse but would fill private pockets.

It said Shell and Eni and some of their most senior executives are now facing bribery charges in Italy and Nigeria, in one of the biggest corporate corruption cases in history.

Prosecutors allege that their $1.1bn payment for the block in 2011 funded bribes to key ministers.

The trial is continuing and the defendants have denied wrongdoing, the anti-corruption group said.

“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,” Ava Lee, a campaigner at Global Witness told the BBC’s World Business Report.</s>A court in Milan is considering charges of corruption against Eni and Shell in a controversial oil deal that led to Nigeria losing an estimated $6 billion.

The campaign group Global Witness has calculated the OPL 245 deal in 2011 deprived Nigeria of double its annual education and healthcare budget.

Eni and Shell are accused of knowing the money they paid to Nigeria would be used for bribes.

The Italian and Anglo-Dutch energy giants deny any wrongdoing.

This unfolding scandal, which is being played out in an Italian court, has involved former MI6 officers, the FBI, a former President of Nigeria, as well as current and former senior executives at the two oil companies.

Global Witness has 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 has 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.

The analysis was carried out by Resources for Development Consulting on behalf of Global Witness, as well as the NGOs HEDA, RE: Common and The Corner. The estimated losses were calculated using an oil price of $70 a barrel as a basis.

Eni has criticised the way it was calculated because it ignores the possibility that Nigeria had the right to revise the deal to claim a 50% share of the production revenues.

Campaigners say the deal should be cancelled.

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

“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.”

Nigeria is the richest economy in Africa, but despite having large resources of oil and gas millions of people are poor.(BBC)
A court in Milan, Italy, examines evidence submitted by the campaign group Global Witness, that alleges bribery around the attribution of the OPL 245 oil prospecting license in 2011 led to a loss for the Nigerian state estimated at US$6 billion.