How NNPC is colluding with Swiss traders to steal Nigeria’s crude oil

Illegally refined diesel transported to market

A damning report lifts the veil on how state oil company, NNPC, is joining forces with foreigners to steal crude oil, robbing Nigeria of billions of dollars.

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The process by which the Nigerian National Petroleum Corporation, NNPC, selects trading companies to which it sells Nigeria’s crude oil is characterised by monumental corruption and intense uncertainty. A report has likened the arrangement to a “beauty pageant.”

In some instances, according to the report, the NNPC collude with foreign companies to facilitate the stealing of Nigerian crude with firms without allocations lifting oil from the country’s shores.

The report, “Big Spenders: Swiss Trading Companies, African Oil and the Risks of Opacity, published by Bern Declaration, BD, a Switzerland-based non-profit transparency organisation, examined the processes involved in the sales of crude oil to Swiss commodity
trading companies by SubSaharan African countries between 2011 and 2013.

The report was co-authored by another Swiss NGO, Swissaid, and an American one, the Natural Resource Governance Institute (NRGI).

 

The report observed that Swiss companies purchased over 500 million barrels of crude valued at $55 billion from 10 sub-Saharan African countries within the period under review. According to BD, the figure “equal(s) 12 percent of the governments’ revenues, and are double what they received in foreign aid.”

Pointing out that Swiss trading companies are the largest buyers of crude from Cameroon, Chad, Equatorial Guinea, Gabon and Nigeria, BD states that these purchases are subject to governance risks because “they take place in environments of weak institutions and widespread corruption”.

In Nigerian, for instance, BD puts the value of crude sold to Swiss trading companies at $37 billion which makes up more than 18 per cent of total government revenue in the period under review.

It observed that unlike most major crude producers around the world, which prefer to sell crude directly to refineries and end users, the Nigerian National Petroleum Corporation, NNPC, sold over a third of Nigeria’s crude between 2011 and 2013 to Swiss companies alone.

“In 2011 and 2012, Swiss companies bought almost half of the identified export sales made by the Nigerian National Petroleum Corporation (NNPC), an estimated $27 billion worth of crude. While this figure dropped to a little less than one third in 2013, as Nigerian companies became bigger buyers, Swiss companies still bought government crude worth an estimated $10 billion,” the report stated.

“Beauty Pageant”-type process

According to BD the annual term contract through which the NNPC selects companies that are eligible to buy crude is so skewed by favouritism and corruption with its criteria for selection so opaque that it could only be likened to the process of selecting the winner of a beauty pageant.

The report states that many of the trading companies on the list are allowed to lift far more that the quantity they are officially allotted.

“In 2012, Vitol and Trafigura each received term contracts worth 30,000 barrels per day. Each of the companies also operates its own oil marketing joint venture with NNPC (both based in Bermuda: Calson for Vitol and Napoil forTrafigura), and these entities each received additional 30,000 barrel per day allocations that year.

“However, rather than 60,000, market data suggests that Vitol bought closer to 145,000 barrels per day in 2012, and Trafigura 97,000—far exceeding their allotted shares, and a discrepancy that illustrates the laxity of the system.”

In fact some companies, which do not appear on the award list, are allowed to lift crude. Particular mention was made of Swiss firm, Arcadia, which lifted 19 cargoes between 2011-2013 despite not being approved to lift crude.

“Nigeria’s award of the term contracts is a discretionary and politicized process, with companies gaining and losing allocations depending on their relationship with the officials in charge and the influence of their local contacts or ‘sponsors,” the BD report states.

The report also points out that the NNPC sells crude to politically exposed “briefcase traders” who in turn sell to Swiss trading companies at a margin “effectively privatizing a profit that could go to the states that sold the oil”.

The report also states that NNPC sells crude below the market value to Bermuda-based subsidiary, Calson. Vitol, a top Swiss trading company, owns 49 percent of Calson.

Last year, another report by BD says Nigeria lost billions of dollars through this deliberate undervaluing of its crude by the NNPC.

Taming the bleeding

In order to solve this glaring compromised process, BD calls for better transparency in the system. It advises producing government to select “buyers through a method that reduces opportunities for favoritism, bribery and manipulation.”

BD suggested “attracting the best possible return for the oil in question, as losses of just
pennies per barrel can add up to significant revenue shortfalls; and insist on “collecting and transferring the revenues to the treasury through a rule-based process that reflects clear national priorities.”

In order to achieve this, BD suggested methods that Nigeria could adopt in the sale of its crude oil.

It believes the country should be transparent about:

  • The name, beneficial owner and country of incorporation of the buying company the volume, grade, and date of any sale, broken down by cargo where appropriate;
  • The price, and how it was determined
  • the revenue received for each cargo, and the destination of that revenue (e.g., used by NOC to
    purchase fuel, transferred to national budget, transferred to a local
    government)
  • A full explanation of the process for choosing the buyer (e.g., the
    allocation of a term contract, an open tender)
  • The full text of the related contract (e.g., term contract, agreement
    to swap crude for refined products).

The report also called on Switzerland to do more in the area of transparency as the centre of commodity trading in the world.

BD said, “Switzerland should accept its responsibility as the world’s leading commodity trading hub and pass regulation that requires Swiss companies producing or trading in natural resources to disclose all payments made to governments and state-owned companies, including payments associated with trading activities.

“In a 25 June 2014 report, the Swiss federal government indicated a preference to exclude
trading-related payments from future regulation of this kind. If that position holds, the payments described in this report would remain secret.”

Download the full report here.


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  • Ijeuwa

    And the stealing continues!!!!!!!!!!!! Just imagine the life of the average Swiss and that of the average Nigerian, and you see that our very government is also a burden on Nigerians. Julius Berger is doing the same thing, so are all these foreign companies, especially the oil companies. Not long ago, Pfizer was made to pay for using Nigerians as guinea pigs. When will Nigeria get a government? Those companies lobby hard to have their crimes against Nigerians go unpunished. They even sponsor their goons as ministers, even to the highest level of the Nigerian govt. Then the IMF and World Bank also come with enslaving policies…

    • The IMF Jews staged a coup in Ukraine so they could steal.

      • Ijeuwa

        Be kind enough to tell me which country the IMF has lifted out of poverty in the so-called developing countries? A ‘medicine’ that has not for once worked in over 7 decades but rather makes those who take it worse off is simply poison!

  • Screw-em

    Why are your Refineries still inoperable.?…..FELA of blessed memory crowed years ago…

    “Everyday my people dey inside bus, ……Suffering and smiling!…..Forty-nine sitting, ninety-nine standing…….

    Them go reach road, go-slow go come…Them go reach road, police go slap…Them go look pocket, money no dey

    Them go reach work, query ready…..Suffering and smiling!.”..opposing Governor go speak out of turn, Assembly go impeach……Folks, we are witnessing what the “nightly” rendezvous between Dumbo Johnny and the slutty 2.3GPA “Architect” Diezani have brought upon our nation. Monies that could have been used judiciously to build starving non-existent or
    dilapidated infrastructures have now been filtered away into hidden Swiss accounts. Our oil revenue is now being distributed among thieves in connivance with the rogues from Switzerland………..

    Open your eye everywhere………Dumbo na miliki……..Madam “headScarf” Okonjo na enjoyment…….Abati/Okupe na gbaladun

  • redeem

    STALE NEWS–THIS STORY HAS BEEN AROUND FOR MORE THAN 5 YRS-SOME MEDIA HOUSES ARE JUST RECYCLING IT FOR APC–ARE THE KEY Players IN THE OIL INDUSTRY NOT ATIKU ATI TINUBU–WHO IS FOOLING WHO IN NIGERIA

    • Mr Igbo Sanity

      Jona has been LOOTING for nearly 6 years

      • redeem

        obj looted for 8 yrs–with atiku–buhari for 9 yrs–3 yrs for him and 6 with abacha

  • Dr Pat Kolawole Awosan

    President Ebele Jonathan and his indicted petroleum minister,Alison Madueke are deeply involved in this type of scam as the same Swiss oil traders-Trafugura and Vitol were also involved and Alison Madueke and Ebele Jonathan were complicit
    with same Swiss oil traders which resulted into Nigeria loss of S8.9 billion dollars oil revenues.Alison Madueke owns a mansion in downtown Vienna,Austria in 2011 and she has been invlived in various massive oil scam and embezzlement.
    Alison Madueke must go.

    • The same thing is happening in Burma… Islamic terrorists and oil swindles robbing the Burmese natives…

      The same thing is happening in Ukraine… the European Union (EUSSR) wants free Russian gas…

      The same thing happened in Libya… the EUSSR wanted cheap Libyan oil…

  • Ette

    Whatever they sow that is what they and their families and generations will reap. May God reward them in same way they are treating Nigerians.

    • muslim brotherhood = mahomet = baphomet = jewish mammonism

      same devil

    • Wale Reze

      God will not come down to help man my brother, it is up to us to take up arms to fight this grave injustice. We can’t afford to leave Nigeria as it is to our future generations!!!

  • NCS

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  • tunde

    reuben abati, we are not fools. these girls have been gone for over 100 days…ONE HUNDRED DAYS. stop insulting our intelligence and keep spouting this pathetic excuse. we have not seen any credible or demonstrable evidence of what this excuse of a government is doing to rescue the girls. GEJ led government is an abject failure and both mr president and you should hang your heads in shame for coming out with this rubbish you have just posted. shame on you, shame on you

    • ismail umar

      The least he can do is come out and encourage people, remember what silence did a few days after the abduction that attracted criticisms to the govt ?

    • peter

      I hear of what the military go through in Borno State, bro it is terrible, trading insults is not a way to justify the fact that they haven’t been rescued. Let us only be hopeful and pray

  • Olu

    Not only Nigerians, the whole world are not fools.

  • Ide4u

    You and your Oga have no priorities!!

  • ismail umar

    We can only hope that the girls are brought back home alive, This requires the intervention of God, We must also be keen to reject the Chenchen incident in Russia where 300 school girls were killed due to forced military intervention in situations like this, Our hope is that the girls are not dead and we pray and believe that the military forces will experience a breakthrough in that regards.

  • peter

    What a boost it will be for the President’s re-election bid if those girls can come out alive. I am an optimistic fella by nature so i have strong beliefs the girls will be rescued.

  • john micheals

    This has gone beyond reasonable, Only God can help the Nigerian Army rescue the girls and i hope it will come to pass.