By: Ifeanyi Izeze
No doubt, the recent injunction of a Federal High Court, Lagos, barring
Royal Dutch Shell’s Nigerian subsidiary from withdrawing money at 20
local banks until it ring-fences potential damages in a lawsuit brought
against the oil major by Aiteo Eastern E&P, an indigenous operator, is a
welcomed development in our nation’s effort to checkmate the
widespread malfeasance and blurred business dealings by multinational
oil operators in this country.
For as long as they’ve been in the Nigerian arena, most if not all,
the foreign operating multinationals have often indulged in wilful
unfair practices and underhand activities against our national
interests. And the case of Aiteo against Shell is just one in a million
of such _wuru wuru_ dealings which has characterised the conduct of the
foreign operators in our oil sector.
The worst part of the whole insanity is that too many insatiably greedy
privileged Nigerians at the corridors of power at different times and in
the NNPC are aiding and abetting the ruining of their own country by the
western and lately Chinese interests operating in Nigeria.
The bone of contention in this rare legal tussle between Shell and Aiteo
is that between 2016 and 2018, Shell putting to use a metering device
not approved by the Department of Petroleum Resources (DPR)
short-changed local operators, Aiteo, being the hardest hit, to the tune
of millions of barrels of produced crude oil.
Aiteo, alongside some other indigenous oil producers, have had a
protracted dispute with Shell alleging that the company short-changes
them using unapproved methodology to calculate the volume of crude it
lifts on their behalf from the terminal. These indigenous operators
alleged that Shell deploys underhand practices including using
unapproved meters dubiously calibrated by the Anglo-Dutch giant to
facilitate crude theft from the smaller Nigerian oil companies that uses
its facilities to transmit their produced oil to Shell’s Bonny export
As said, the interim Mareva injunction by the Lagos High Court is aimed
at recovering the cash value of the millions of barrels of crude
allegedly diverted from Aiteo, an indigenous operator by the Anglo-Dutch
Court documents show that Aiteo is seeking about $4 billion in total
over alleged problems with the Nembe Creek Trunk Line (NCTL) pipeline it
bought from the Anglo-Dutch group in 2015 and over claims Shell
undercounted its oil exports.
Aiteo also accuses Shell of deliberate improper metering of the Nigerian
company’s oil exports from the Bonny Light terminal. It is seeking
$2.7 billion over the pipeline deal plus $1.28 billion for lost oil
sales, the court documents show.
Is it not curious that before Aiteo approached the court, the DPR, the
government regulatory agency of the oil and gas industry in its
settlement after investigations had ordered Shell Nigeria to refund
2,081,678 barrels of crude oil understated between 2016 and 2018 to the
affected local oil companies including Aiteo, Eroton, Newcross and
In an official communication, signed by M. Alaku, titled, “Allocation
of Bonny Terminal Gross Volume From June 2016 to July 2018 Based on
Comparison of Metered Gross Volume Between the Coriolis Meter and LACT
Unit Installed on the NCTL,” the DPR demanded that Shell should return
the missing crude amounting to over 2 million barrels to the affected
local oil companies including Aiteo, Eroton, Newcross and Belema Oil.
But because the Anglo-Dutch oil giant has no iota of regard for
Nigeria’s constituted authourities and thinks it can do whatever it
wants and get away with it (as has been its practice) because of
corruption in our system, now this case is snowballing into a dirty
scandal of international dimension. And be sure that more of such cases
are coming involving some other foreign multinational operators.
What is clear in this case is that some barrels of crude oil were indeed
missing during the period under review and the Nigerian unit of the
Royal Dutch Shell has indeed agreed to return the missing commodity.
It is very clear that Shell and its co-travellers deliberately installed
the Coriolis meter in bad faith and this was meant to deceive Aiteo and
other smaller Nigerian oil concerns regarding the amount of crude oil
volumes due to them.
As affirmed by industry experts, the Coriolis meter has poor zero
stability which affects flow meter accuracy. So it cannot be used for
fluids with lower density and sensitive to external vibration
interference, among others.
The angle the Nigerian government authorities are not taken seriously is
that this exposed fraud which is prevalent in our nation’s upstream is
beyond mere crude oil theft. It borders heavily on national security and
The case of short changing Aiteo, Belema Oil, Eroton and NewCross
through improper metering is just a scratch in the magnitude of the harm
Shell, Agip and the rest of them have perpetrated against our national
interest in the oil industry. Some government officials and retired
military generals know this all the while but because they are all
complicit in the crime nobody is saying anything while the foreign
multinationals now including the Chinese are having free hands to do
with our oil what they want with impunity.
Top managers of the NNPC especially NAPIMS and some other strategic
business units are all part of this widespread fraud in accounting for
the produced crude oil in this country. Is this how a serious country
Imagine that we are talking of over 2 million barrels stolen from one or
two small indigenous marginal producers within just two years. This will
give you an idea of what these foreign multinational companies had done
to Nigeria. If they can install fraudulent meters to undercut poor
marginal producers, what should have happened at our various crude oil
The entire Nigerian shallow and deepwater arenas are littered with
Floating Production and Storage facilities (FPSO). And this is the
frontiers where oil wells/fields are bleeding as if there is not
tomorrow. Who checks how these foreign operators account for produced
oil on those facilities- DPR and NAPIMS or the DSS? _Abegi_!
Though the Lagos High Court judgement in favour of the Nigerian
independent is worth celebrating, if Aiteo thinks it has won the case or
it’s going anywhere with it, the company should better have a rethink
because in our courts, everything can turn 360 degrees around overnight
and this is what is going to happen. Mark my words!
It has been said serially that our court systems is one of the biggest
obstacles to the nation’s fight against corruption and other financial
These western multinationals and even the Chinese have come to know how
to manipulate our judicial system more than any of us in this country.
They understand very well that the highest bidder wins the case in any
situation no matter how bad their case.
Recall what happened to the federal government’s litigation against
Shell, Agip and others over their frauds in crude oil volume
under-declarations. This particular case was meticulously proven with
documents and data from foremost American metric companies and even the
FBI to show that the declared volumes of lifted crude oil exports from
Nigeria by these companies were incredibly far lower than the actual
volumes discharged at the various receptor facilities in the U.S and
China. But what happened? Suddenly the Lagos High Court made a 360
detour and quashed it for “lack of sufficient evidence to prove the
allegation of under-declaration.”
The Federal Government promised to appeal the judgement and for about
four years now has the Attorney General done anything towards appealing
the case? Nothing till today! That’s the country we call Nigeria.
Until our patriotism gets to the level of fanaticism and it’s
gradually getting there, nothing is going to change in this country
because the injustice and the endemic rot in this country has become
systemic and traditional. God bless Nigeria!