Eni CEO under investigation over Nigerian oil deal

Dan Ete
Dan Ete
Dan Etete

Eni SpA Chief Executive Officer, Claudio Descalzi, has been placed under investigation over alleged corruption relating to a big Nigerian oil deal, the company said on Thursday, just four months after he took the helm at the oil major, Italy’s biggest listed company.

Milan prosecutors opened a probe earlier this year and have now widened the net to include Descalzi, in a case relating to a $1.09 billion acquisition of Nigeria’s Oil Prospecting Lease (OPL) 245 offshore oil block in 2011.

Eni confirmed Descalzi was being investigated after a report in Italian daily Corriere della Sera said he was being probed over the Nigeria deal.

“Eni is cooperating with the Milan prosecutor’s office and is confident that the correctness of its actions will emerge during the course of the investigation,” it said in a statement.

A long-standing executive at Eni and former head of its core exploration and production division, Descalzi took over in May from Paolo Scaroni, himself under investigation for alleged corruption in Algeria, although the company said in January it had found no evidence of illegal conduct by the group in relation to the north African country.

Eni said its Operations and Technology Officer Roberto Casula was also being probed. Court sources told Reuters on Thursday Scaroni was also under investigation in the Nigerian case. Scaroni and Casula could not immediately be reached for comment.

Milan brokerage Akros noted Eni had been involved in a similar case in Nigeria in 2009, when it paid around $400 million to settle the dispute.

“We believe that the potential negative impact on Eni may be worth 500 million euros or around 1 percent of the current market capitalisation,” it said in a note.

Ownership of the OPL 245 field has been in dispute for more than a decade.

Former Nigerian oil minister Dan Etete awarded the block in 1998 for $20 million to Malabu Oil and Gas, a company in which he was a leading shareholder. Malabu however only ever paid $2 million for the stake, in 1999.

The field was eventually sold on to Eni and Shell in 2011 for a total of $1.3 billion, including a signature bonus of around $207 million.

Malabu received around $1.09 billion from the sale, while the Nigerian government kept the rest, a British court document has shown.

Campaigners for greater transparency in political and business dealings, who asked Britain to look into the matter, allege Shell and Eni used the Nigerian government as a go-between to obscure the fact they were dealing with Etete.

Eni, the biggest foreign oil and gas producer in Africa, has always said it dealt exclusively with the government of Nigeria and Shell over the acquisition.

Elsewhere Ebeka Obi, a Nigerian intermediary for Etete, has brought a court case in Britain against Malabu for unpaid fees relating to what he says was his help in brokering the Shell-Eni deal.

OPL 245 could contain up to 9.23 billion barrels of crude oil, more than enough to keep China running for two and a half years.

Eni has operated in Nigeria since the early 1960s and the country accounted for around 8 percent of its total output last year.