The Federal Government has lost trillions of naira to oil companies due to failure to adjust the sharing formula of revenue from crude oil, court papers filed at Supreme Court showed.
In a suit filed by Rivers, Bayelsa and Akwa-Ibom states against the FG at the Supreme Court, the government’s failure to review the sharing formula, when the price of crude oil exceeded $20 per barrel from August 2003 as provided by law was said to have cost government trillions of naira in oil revenue.
The plaintiffs in the attached affidavit to the originating summons claim that: “the Parliament in enacting the Deep Offshore and Inland Basin Production Sharing Contracts Act (DOA) stipulated in Section 16(1) thereof that at any time the price of crude oil exceeds US$20/bbl, the share of the defendant (FG) shall be adjusted upwards under the Production Sharing Contracts to favour the Defendant.”
“At the least price of US$100/bbl, there was earnings of US$210,000,000 per day which translates US$76,650,000,000 (Seventy-six billion, six hundred and fifty million US dollars) per annum.
“Using the total earning per annum as a multiplicand by 15 years from 1999-2015, a total sale earning of US$1,149,750,000,000 (One trillion, one hundred and forty-nine billion, seven hundred and fifty million US dollars) was earned between the defendant and its Production Sharing Partners in the Production Sharing Contracts for the period.
“At today’s Naira street value of US$1/NGN470.00, that sum translates to ₦540,382,500,000,000.00 (Five hundred and forty trillion, three hundred and eighty-two billion, five hundred million) only.”
According to the affidavit, the first four Production Sharing Contracts were with: Nigeria Agip Energy (NAE) over the ABO Oil Field which produced its first oil in August 2003 at which time the oil nominal price was US$28.36/bbl; and Shell Nigeria Exploration and Production Company Limited (SNEPCO) over the BONGA Oil Field which produced its first oil in December 2005 at the oil nominal price of US$62.27/bbl.
Others are: Exxon-Mobil over the ERHA Oil Field, which produced its first oil in April 2006 at which date the price of crude oil had increased to US$68.34/bbl; and StatOil (British Petroleum) over Agbami Oil Field which produced its first oil in September 2008 at which the price of crude oil had increased to US$95.23/bbl.
Lead counsel for the three Attorney-Generals, Mr Lucius Nwosu (SAN) said the case is not a hostile litigation but such intended for the interpretation of Section 16(1) of the DOA.
After ordering that Akwa-Ibom state be joined as the third plaintiff, the seven-man panel headed by Justice Bode Rhodes-Vivour thereafter fixed November 14 for commencement of trial.
Nigerian Government Loses Trillions To Oil Companies Over Sharing Formula
The Federal Government has lost trillions of naira to oil companies due to failure to adjust the sharing formula of revenue from crude oil, court papers filed at Supreme Court showed.
In a suit filed by Rivers, Bayelsa and Akwa-Ibom states against the FG at the Supreme Court, the government’s failure to review the sharing formula, when the price of crude oil exceeded $20 per barrel from August 2003 as provided by law was said to have cost government trillions of naira in oil revenue.
The plaintiffs in the attached affidavit to the originating summons claim that: “the Parliament in enacting the Deep Offshore and Inland Basin Production Sharing Contracts Act (DOA) stipulated in Section 16(1) thereof that at any time the price of crude oil exceeds US$20/bbl, the share of the defendant (FG) shall be adjusted upwards under the Production Sharing Contracts to favour the Defendant.”
“At the least price of US$100/bbl, there was earnings of US$210,000,000 per day which translates US$76,650,000,000 (Seventy-six billion, six hundred and fifty million US dollars) per annum.
“Using the total earning per annum as a multiplicand by 15 years from 1999-2015, a total sale earning of US$1,149,750,000,000 (One trillion, one hundred and forty-nine billion, seven hundred and fifty million US dollars) was earned between the defendant and its Production Sharing Partners in the Production Sharing Contracts for the period.
“At today’s Naira street value of US$1/NGN470.00, that sum translates to ₦540,382,500,000,000.00 (Five hundred and forty trillion, three hundred and eighty-two billion, five hundred million) only.”
According to the affidavit, the first four Production Sharing Contracts were with: Nigeria Agip Energy (NAE) over the ABO Oil Field which produced its first oil in August 2003 at which time the oil nominal price was US$28.36/bbl; and Shell Nigeria Exploration and Production Company Limited (SNEPCO) over the BONGA Oil Field which produced its first oil in December 2005 at the oil nominal price of US$62.27/bbl.
Others are: Exxon-Mobil over the ERHA Oil Field, which produced its first oil in April 2006 at which date the price of crude oil had increased to US$68.34/bbl; and StatOil (British Petroleum) over Agbami Oil Field which produced its first oil in September 2008 at which the price of crude oil had increased to US$95.23/bbl.
Lead counsel for the three Attorney-Generals, Mr Lucius Nwosu (SAN) said the case is not a hostile litigation but such intended for the interpretation of Section 16(1) of the DOA.
After ordering that Akwa-Ibom state be joined as the third plaintiff, the seven-man panel headed by Justice Bode Rhodes-Vivour thereafter fixed November 14 for commencement of trial.