By Jonathan Nda- Isaiah,
Some Nigerian lawyers and Civil Society Organisations have dragged Shell Petroleum Development Company of Nigeria Limited, Shell Nigeria Exploration and Production Company Limited and their other allied companies like Shell Western Supply and Trading Limited before Nigerian authorities over alleged crude oil theft.
Their petition was drafted by a consortium of lawyers for human right and justice led by Barrister Peter Abang.
The separate petitions were forwarded to President Muhammadu Buhari; the Chairman of the Economic and Financial Crimes Commission; as well as the US Security and Exchange Commission.
In the petitions dated March 3, 2021, the petitioners accused Shell entities of stealing over 16m barrels of crude oil and selling same in the international market and appropriating the proceeds.
They therefore called on the authorities to investigate, prosecute and sanction the firm for the theft.
The petitioners specifically called for the seizure of the firm’s assets and sought compensation and recovery of the value of the stolen crude at prevailing market price so that Nigeria and the Indigenous Oil Companies will not be denied their legitimate earnings and tax values accrued to the government.
They identified Shell as the operator of the Bonny and Forcados crude oil export terminals with capacity of 5,700,000 barrels and 6,289,832 barrels from both terminals and making the company the largest exporter of Nigeria’s crude oil.
The firm, according to them, was also the owner and operator of the OML 29 and the Nembe Creek Trunk Line (NCTL) which they divested in 2015 to an indigenous company, AITEO EASTERN E & P COMPANY LIMITED.
According to the petitions, the company then had a terminaling agreement with Shell, who being the operators of the Bonny Oil Terminal were to be the handlers of the crude oil injected into the NCTL by the Nigerian Company and other local oil companies that transport their oil to the terminal through NCTL.
The petition read in part, “In crude oil handling, there are allocations made for water and oil theft which are calculated and then deducted from the total volume of crude supplied by the various companies.
“The methodology for calculating the water and crude theft allocations is determined by the Department of Petroleum Resources (DPR) on behalf of government and this methodology is reviewed periodically in line with the Petroleum Act.
“In 2016, the DPR approved methodology was to be conducted with the use of a Leased Automatic Custody Transfer (LACT) Unit Metering System and not any other system.
“Following several complaints, the DPR investigated and discovered that instead of the approved metering system for calculating water allocation and crude theft, Shell deployed the Coriolis Flow Meter which clearly underreported the volume of crude which passed to the terminal thereby short-changing the Local Oil Companies and ultimately denying the country of scarce revenue which shell stole and appropriated.
“Upon conclusion of investigation, the DPR wrote a letter dated 9th February, 2018 to Shell wherein it notified Shell that the Coriolis Flow Meter was installed by Shell without approval among other indictments in the letter. The DPR went ahead in the same letter to sanction Shell and imposed a penalty of Two Hundred and Fifty Thousand Naira (N250, 000:00) only for violations of the Petroleum Act and Mineral Oil safety Regulation. A copy of this letter is hereby attached and marked as Annexure 1.
“However, this penalty by the DPR is not a recovery of the stolen crude or its monetary value, or the attendant lost revenue to government. Hence there is the urgent need for the commission to intervene and recover the full value of all the stolen crude from Shell which it stole through the use of the unapproved metering system and deliberate understating of the volume of crude oil which was injected into the Bonny Oil Terminal.
“This deployment of an unapproved metering system by Shell was done to steal the crude oil and its proceeds, defraud the real owners of the products, wrongfully appropriate to itself the crude oil and proceeds which do not belong to it and also unlawfully convert and retain to itself the crude oil and its proceeds.”
According to the petitioners, Shell’s action in stealing the crude oil and deliberately and wrongfully raising the volume of crude oil theft misdirected the Federal Government into expending resources in monitoring and combating pipeline vandalism and oil theft at a scale which was not in existence just because Shell was stealing the oil by the use of an unapproved metering system.
“This obviously is a threat and indeed a breach of national security. The DPR has also indicted shell in the past. This indictment can be seen from the letter dated 23rd December, 2015 by DPR to shell.
“It must also be stated that the Federal Government has also taken out a Suit FHC/L/CS/336/16 wherein the government levelled allegations of understating of crude oil volumes by Shell thereby depriving government of revenue that would have accrued to it,” the petitioners added.
They further claimed that in compliance with DPR directives earlier referenced, Shell in a letter dated 30th November, 2018 to the DPR admitted to the fraud, stealing, wrongful appropriation and unlawful conversion of crude oil that did not belong to it to the value of 732, 262 barrels of crude oil valued at $51, 214, 829 (Fifty One Million, Two Hundred and Fourteen Thousand Eight Hundred and Twenty Nine Dollars) only.
They said DPR however rejected the letter and correctly stated that Shell had stolen at least 2, 081, 678 valued at $165, 493, 401 (One Hundred and Sixty Five Million, Four Hundred and Ninety Three Thousand Four Hundred and One Dollars) calculated at $79.5 per barrel when the crude was stolen.
The petition added, “DPR found that Shell stole approximately 200, 000 barrels monthly. This unapproved metering system by shell continues to this day and the stealing continues to this day meaning it has gone on for at least 6 years. Nigeria has lost billions of Dollars of revenue due to it to Shell. Shell has not returned this money till date.
“You will be surprised to note that despite the figure of manipulation stated by the DPR which is 2, 081,678 barrels stolen by Shell and which Shell has now admitted and committed to refunding in its letter dated 8th February, 2021, an indigenous company which is now the beneficial owner of the NCTL after detailed forensic investigations carried out by its experts established with documentations that the accurate volume of crude stolen, wrongfully appropriated and unlawfully converted by Shell from its own allocation is actually 16, 050, 000 barrels valued at $1, 275, 975, 000:00 (One Billion Two Hundred and Seventy Five Million Nine Hundred and Seventy Five Thousand Dollars) only.
“If these figures are found to be correct, then the Federal Government would have been losing tens of billions of Naira in revenue which would have accrued to it. This is noting that other indigenous companies including Belema Oil, Eroton and Newcross have not conducted their private investigations and released their own figures. This makes the total so far identified to over 17, 000, 000 barrels of crude oil.”
Based on the revelations, the petitions called for immediate investigation of the case with a view to:
“ Ascertaining the real volume of crude stolen by Shell.
“ Ascertaining the real monetary value of the crude stolen by Shell based on the price at the international market as of the time they were stolen.
“ Recovering all the value of the crude oil stolen by Shell
“ Arresting and Prosecuting all the Directors of Shell and the Company itself, seizure of their assets for economic crimes, Nationalization of their assets, sanction and compensation etc
“ Ensuring that the Indigenous Oil Companies are paid the prevailing market value of the over 16m stolen barrels of oil and that Federal Government receives it due revenue into the Federation Account which has been denied it by the criminal acts of Shell.
“ Ensuring better liaison with other government agencies in the oil and gas sector so that any future attempt by any International Oil Company to short change Nigeria will be nipped in the bud.