Chevron accused of illegal price inflation in Nigeria

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Getty Images

Chevron Nigeria is accused of illegally inflating the price of Escravos gas-to-liquid (EGTL) project and is now being investigated by the Senate Committee on Gas, demanding records of the contract they held. Authorities questioned Chevron Nigeria about the decision to increase spending without their partners’ approval, declaring that they violated the terms of their partnership. They also asked why the cost had jumped margins of nearly $7 billion dollars, beginning at $2.9 billion and ending at $10.3 billion.

The project was planned in Qatar, with a US price tag of $1 billion. Work began in 2005, ran into several delays then restarted in April 2015. Confusion lured over the NNPC’s role in EGTL. The company said it was no longer part of the project. Chevron Nigeria disproved this statement by proving the company did not withdraw from the deal, accepting payment of US$35 million from proceeds.

Following the price increase, in 2008, Sasol withdrew involvement of more than 20% of its stakes.

Initially, expansion of EGTL to 120,000 bpd was the goal within ten years of construction. An update from Sasol explains how the project was “both trying and rewarding,” requiring large investments to have equipment delivered, unlike the Oryx site. With repeated attacks from the Niger Delta Avengers (NDA), the investigation could not come at a more trying time for Chevron.

Article written by HEI contributor Marcela Abarca.

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