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Nigeria’s failure to review lopsided deals lead to loss of US$28.6 Billion
Kaieteur News – Although it may be Africa’s largest oil producing nation, Nigeria is losing billions of dollars due to lopsided deals with companies such as ExxonMobil, Total, and Petrobras. In fact, a recent study on this state of affairs shows that in the last decade, Nigeria lost approximately US$28.61 billion due to its failure to review the poor Production Sharing Contract (PSC) terms that govern seven deepwater fields in the country.
Chevron’s Agbami FPSO
This projection was made in a policy brief released by the Nigeria Extractive Industries Transparency Initiative (NEITI) titled “1993 PSCs: The Steep Cost of Inaction.”
The seven deepwater fields considered in the report are Abo (OML 125), Agbami-Ekoli (OML 127 & OML 128), Akpo & Egina (OML 130), Bonga (OML 118), Erha (OML 133), Okwori & Nda (OML 126), and Usan (OML 138).
The field operators include, but are not limited to Eni, Total, Shell, Chevron, Famfa Oil, Exxon Mobil, Petrobras, South Atlantic Petroleum and Addax petroleum.
Based on the empirical evidence provided in its policy brief, NEITI said that the billions of dollars in lost revenue could have been used to fund long-standing capital projects to deal with the nation’s infrastructure deficit. More significantly, the transparency body stressed that the money lost could have supported 99 percent of the federal government budget for 2019. The US$28.6B loss is also 19 times Guyana’s 2020 budget.
As a result of the loss recorded, the government was forced to resort to borrowing in its struggle to fund the capital projects outlined in its 2019 budget.
Taking the foregoing into consideration, NEITI charged the federal government to use relevant agencies to “immediately” review the PSC terms with oil companies.
The NEITI brief noted that the oil companies “have expressed willingness to negotiate better terms.”
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