A Federal High Court in Ikoyi, Lagos State, has dismissed an application filed by two major oil firms, Chevron Plc. and Total Plc., seeking to stop the companies’ trial on allegation that they under-declared the quantity of crude oil they lifted from Nigeria.
Justice Mojisola Olatoregun struck out the applications for lack of merit.
At the hearing, counsel for the Federal Republic of Nigeria, Fabian Ajogwu, told the court that the government had filed a motion to amend the claims and file additional processes. Chevron’s counsel, Miannaya Aja Essien, said the firm had filed a counter-affidavit along with a written address seeking the dismissal of the suit.
In his ruling, Justice Olatoregun described the company’s preliminary objection as premature, and struck it out.
In like vein, the judge also struck out an application by Total Plc., which similarly sought a ruling to stop its prosecution by the Nigerian government over undeclared crude lifting.
Mr. Ajogwu informed the court that the government had filed an application on June 6, 2016 to amend its claims against Total. The counsel to Total Plc., Babatunde Fagbohunlu, asked the judge to dismiss the government’s suit, a plea the judge dismissed as premature.
Justice Olatoregun adjourned the two lawsuits till October 25, for hearing.
The Nigerian government sued the two oil firms in order to recover various sums of money representing the value of oil exports that the firms either did not declare or under-declared. The government is also pursuing similar recovery suits against other oil companies, but the details of those cases are not yet available.
The Nigerian Government is claiming the sum of $490,517,280 from Total. The government’s statement of claims, accompanied by sworn affidavit of three United States of America-based professionals, alleged that, sometime in 2014, it realized there was a decline in the revenue it derived from the exportation of crude oil. The decline triggered intelligence gathering of data, which revealed that the major reason was either the failure by the oil firms to declare oil shipments or their falsification of shipment documents to under-declare the amount of crude exports.
The three professionals who swore to affidavits are David Olowokere, the lead analyst at Loumos Group LLC, a technology and oil and gas auditing firm based in United States of America; Jerome Stanley, a counsel in the law firm of Henchy & Hackenberg, a law firm engaged by Loumos Group LLC, and Michael Kanko, the founder and Chief Executive Officer of Trade Data Services Company.
On discovering the shortfall, the Nigerian Government established a consortium of experts, both foreign and local, to track the global movements of the country's hydrocarbon, including crude oil and gas. The experts were tasked with identifying the companies engaged in the practices that led to the colossal loss of revenues from crude oil and gas exports.
The experts compared export records from Nigeria with import records at respective ports in the United States of America, examined data on shipment, including its bills of lading, oil vessels used for shipment, date of arrival at the destination ports and ports of origin. The documents enabled the experts to conclude that there were significant discrepancies in the quantity of crude oil lifted from Nigeria compared to the data the oil firms submitted at ports of destination.
The experts found out that the quantity of crude oil shipments declared to have been lifted from Nigeria was substantially less than what was declared in the US. In some cases, the defendants altogether failed to report crude oil shipments to relevant Nigerian authorities, especially pre-shipment inspection agents.
The Nigerian Government insists that all crude oil and gas exports are required to be declared to and inspected by pre-shipment agents appointed by the Central Bank of Nigeria. The inspection records are subsequently to be deposited with the country’s Ministry of Finance.
The Nigerian Government stated that its consultants deployed high-technology information technology systems, including satellite-tracking systems, to gather information that established shortfalls in the export declarations by the accused oil firms. The government alleges that Total, Agip, Chevron, and other companies illegally exported 57 million barrels of Nigerian crude oil between January 2011 and December 2014. According to the government, the total loss of revenue to Nigeria amounted to $12.7 billion.
Data gathered by the experts retained by the Nigerian government revealed that Total lifted 968,784 barrels of crude oil on board a vessel named Triathlon, and shipped the oil to the US, but did not declare it to the relevant Nigerian authorities. The reported revenue loss to Nigeria was $106,566240.
The Nigerian government also listed other under-declared crude oil shipments, including 491,850 barrels valued at $54,103,500 on board a vessel named North Star, with bill of lading DROESVD23091101. The government alleged that two separate shipments of 768,990 barrels of crude oil, valued at $84,588,910, were taken on board a vessel named Authentic.