Nigeria Is Allegedly Missing $17 Billion In Oil Revenue And Wants To Sue Its Way To Finding It

Last month, a Nigerian lawmaker in the House of Representatives, Johnson Agbonayinma, told the other members of the House that Nigeria was missing $17 billion in oil revenue from oil and liquefied natural gas export.

He alleged that the oil and liquefied natural gas had been exported from Nigeria without being properly declared between 2011 and 2014. Some of the missing products he mentioned were about 58 million barrels of oil and 727,000 metric tons of liquefied natural gas.

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Following his allegations, Nigeria’s lower house of parliament ordered an investigation into whether $17 billion of fuel exports were stolen. It had been the latest allegation of multibillion-dollar graft directed at Nigeria’s oil industry.

oil revenue

Nigeria’s government is running with the belief that international oil companies are at least partially responsible for the missing oil revenue. They made this clear by the series of lawsuits they filed earlier this year. Some of the oil majors that were implicated are, American firm Chevron and Italy’s Eni. The two were accused of not declaring $12.7 billion worth of crude and natural gas exports.

So why is Nigeria still finding it hard to prove the absence of these large sums of allegedly undeclared petroleum money? Analysts say the problem is with deficiencies in Nigeria’s oil infrastructure.

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One of such analysts, Dolapo Oni, the head of energy research at Ecobank, explains that “Nigeria doesn’t measure its oil production based on how much individual oil wells produce, but rather how much oil leaves through its export terminals.” According to her, such an approach is vulnerable to undercounting and therefore shortens oil revenue.

She goes on to say that if the country’s pipelines and wellheads had meters, regulators would be better able to track where Nigeria’s oil is going and figure out exactly how much oil the country produces. That is to say that the country currently does not know how much oil it produces.

oil revenue

Nigeria’s Officer at the Natural Resource Governance Institute Dauda Garuba spoke about the lack of meters on Nigerian pipelines and wellheads, stating that oil companies have rejected calls to put meters on oil infrastructure, saying it would be too expensive. He, however, added that Nigeria’s government has also failed to pull its weight.

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According to him, the Petroleum Industry Bill would reform Nigeria’s oil sector but has languished in the national assembly for years. One of those reforms could be to mandate metering on all segments of the oil supply chain. Speaking of the allegations on the missing money he said:

“For me, I think they’ve been sleeping on their rights and their responsibility forever, … It’s also getting worrisome that each time you hear of scandals like this, nothing gets to come of it.”

Nigeria is currently in a recession and the government is in need of new revenue to furnish its budget some of which is to be got by borrowing money from lenders like the World Bank and African Development Bank. Should the country get payouts from the lawsuits on oil revenue, it would, however, have money to fund a chunk of the $30 billion the country wants to spend this year.