Group considers litigation over $34.7 billion oil revenues

The Socio-Economic Rights and Accountability Project, has threatened to take legal action against the Nigerian government if it fails to collect over $34.7 billion “overdue revenue” from oil companies operating in the country.

The amount is the calculation of proceeds accruable from crude oil productions over a period of four years, between 2004 and 2008.

Outstanding Revenues

The non-governmental organisation claims that most of the operators have been producing at close to peak production since they brought their fields on stream in 2005. “For instance, Shell’s Bonga produced 58.5 million barrels in 2006, 93.4 million barrels in 2007, 64.4 million barrels in 2008 and 16.7 million barrels in 2009. Mobil’s Erha produced 53.4 million barrels (2006), 74.9 million barrels (2007), 72.4 million barrels (2008), and 23.32 million barrels (2009), while Chevron’s Agbami has produced 19.4 million barrels in 2009; and Agip’s Abo produced 3.6 million barrels (2004), 10.4 million barrels (2005), 9.2 barrels (2006), 6 million barrels (2007), 6.6 million barrels (2008) and three million barrels in 2009,” it states.

Computing the financial value of the accruable revenue spanning a period of five years, the group said, “when these volumes produced by the oil companies are computed against the average price of crude oil, which the Organisation of the Petroleum Exporting Countries (OPEC) website put at $42.04, $59.09, $70.98, $75.21 and $98.50 per barrel in 2004, 2005, 2006, 2007 and 2008, respectively, this translates to $34.7 billion that has accrued from four of the five fields between 2004 and 2008.”

The group alleges that the failure of the government to “fully collect overdue revenues from the oil companies involved and ensure its transparent and efficient use for infrastructure development and the good of the country, is a violation of Section 16 of the Deep Offshore and Inland Basin Production Contracts Act of 1999, the 1999 Nigerian Constitution and Nigeria’s international human rights obligations and commitments.”

Oil companies involved

Adetokunbo Mumuni, the group’s director, cites some of the oil companies involved to include; Shell Petroleum Development Company (SPDC), Total E&P Nigeria Ltd, the Nigerian Agip Oil Company, Chevron Nigeria Limited, and Exxonmobil Corporation.

In a letter dated October 18, and signed by the organisation’s solicitor, Femi Falana, which was sent to Michael Aondokaa, the Attorney General and Minister of Justice, it stated that the group is going to “take steps to seek the leave of court for an order of mandamus compelling the government to discharge its responsibility under Section 16 of the Act, if the government fails to act within seven days of the receipt and/or publication of the letter.”

But when contacted by NEXT, none of the oil companies involved in the matter was willing to comment on it.

Government’s negligence

Section 16 (1) of the Deep Offshore and Inland Basin Production Contracts Act of 1999 states: “The provisions of this decree shall be subject to review to ensure that if the price of crude oil at any time exceeds $20 per barrel, real terms, the share of the government of the federation in the additional revenue shall be adjusted under the Production Sharing Contracts to such extent that the Production Sharing Contracts shall be economically beneficial to the government of the federation.”

The group adds, “Given that the price of crude exceeded $20 per barrel from 2004 to date, had the government’s share been adjusted under the Production Sharing Contracts to such extent that it is economically beneficial to it, the amount that could have accrued to the Federation Account would be over $18 billion.”

It also alleges that, “the Administration of former president Olusegun Obasanjo between May 1999 and January 2007, failed to collect the over $18 billion owing to negligence to propose relevant amendments to the Deep Offshore and Inland Basin Production Contracts Act of 1999 to the National Assembly.”

The group argues that “the persistent failure and lack of due diligence by the government to fully implement the provision of the Act, by proposing amendments to the Act, is a failure of responsibility, which has also contributed to a massive reduction in resources available to the government. This in turn has limited the ability of the government to access, harness and use the country’s available resources for the full realisation of human rights of millions of Nigerians who continue to face absolute poverty. It is also contributing to underdevelopment and exacerbating inequality in the country.”

Also, efforts to get the Attorney General’s office to respond were not successful. Numerous phone calls and text messages to Taye Ige, a spokesperson for the Attorney General, were not replied.