Nigerian authorities are examining whether Abuja has been shortchanged by a state oil company program that swaps crude oil for refined products, the company, three oil traders and a security source said.
Nigeria might be losing money through opaque contracts in which crude oil worth billions of US dollars is given to traders for refined imports, mainly gasoline, international and domestic watchdogs have said.
The Nigerian Economic and Financial Crimes Commission and Department of State Services reportedly began the probe last month.
A commission spokesman said he was unable to comment at this time; the department did not respond to requests for comment.
A security source with knowledge of the matter said the department wanted to find out how the values of the crude and products were computed.
“It appears that the value of the crude was more than the value of the refined imported [products],” the security source said.
The contracts, known as offshore processing agreements, are between Pipelines and Product Marketing Co (PPMC), a unit of the state-run Nigerian National Petroleum Corp (NNPC) and three oil trading companies: Sahara Group, Aiteo and Duke Oil, the trading subsidiary of NNPC.
Expired contracts with Swiss trader Trafigura Beheer, the Taleveras Group and Ontario Oil and Gas are also being examined, the sources said.
The head of PPMC was among company officials called in by the investigating agencies over the past two weeks to answer questions about the agreements, the NNPC sources said.
“It started about two weeks ago ... he was called in to the Department of State Services every day since Thursday and before that by the Economic and Financial Crimes Commission,” one senior NNPC official said.
‘SHED LIGHT’
A statement from the NNPC said some of its officials were invited by the agencies “to shed light” on the contracts and that none had been detained or arrested as part of this investigation.
The Nigerian Extractive Industries Transparency Initiative has said there was a revenue loss of at least US$600 million due to a discrepancy between the value of the crude and the products delivered. The figure was taken from its audits of the oil and gas industry from 2009 to 2011 and 2012; the latest was released this year.
Some contract-holders have said that the discrepancies in value were reconciled.
Sahara, which receives 90,000 barrels per day for processing through an agreement with the Societe Ivorienne de Raffinage, said it was invited to the commission and submitted information to show that its contract was justified.
Aiteo, which also has a 90,000 barrel-per-day contract, could not be reached for comment. There was no response to an e-mail and no telephone details were given on its Web site.
NNPC subsidiary Duke Oil, which has a 30,000 barrel-per-day contract, could also not be reached for comment. The listed telephone number led to its parent company and it did not respond to an e-mail.
A spokesman for Taleveras, which held a crude swaps contract between 2011 and December last year via Duke Oil, said that the company did not owe any money and it would deliver gasoline until this month to balance out what it received in crude.
A spokesman for Trafigura said that the commission had requested information about its swap contract, which the company provided over the past month.
Trafigura held a refined products exchange agreement between October 2010 and December last year, records showed.
“Despite Trafigura facing extensive logistical challenges in delivering refined product into Nigeria … delivery would typically precede the corresponding swap of crude oil by an order of weeks — sometimes months,” the spokesman said.
‘SUPPLY IMBALANCES’
“This reality led to ongoing supply imbalances ... and ultimately reconciled, every two months over the duration of the term,” he said.
Nigeria relies on imports for the bulk of its domestic gasoline demand, which is met by gasoline coming via the crude exchanges and through a subsidy scheme that was at the root of acute fuel shortages at the end of last month.
The administration of Nigerian President Muhammadu Buhari came into power on an anticorruption platform and the commission appears eager to show it has teeth.
Right after Buhari’s inauguration on May 29, six central bankers and 16 commercial bank staff were accused of currency fraud by the commission, the agency said.
The commission has investigated various oil scandals in the recent past, namely a fuel subsidy fraud costing the government US$6.8 billion between 2009 and 2011. However, due to a lack of political will, few were prosecuted, and with little result.
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