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FG Sues JP Morgan for $875m Over Malabu Oilfield Deal

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  • FG Sues JP Morgan for $875m Over Malabu Oilfield Deal

The Federal Government has filed a claim against a United States lender, JP Morgan Chase, for more than $875m, accusing the bank of negligence in transferring funds from a disputed 2011 oilfield deal to a company controlled by a former Nigerian minister of petroleum resources.

According to a Reuters’ report, a spokeswoman for JP Morgan dismissed the accusation on Thursday, saying the firm “considers the allegations made in the claim to be unsubstantiated and without merit.”

The suit filed in a British court relates to a purchase of the offshore OPL 245 oilfield in Nigeria by oil majors Royal Dutch Shell and Eni in 2011.

At the core of the case is a $1.3bn payment from Shell and Eni to secure the block that the lawsuit said was deposited into a Federal Government’s escrow account managed by JP Morgan.

The lawsuit said JP Morgan then received a request from the finance ministry workers to transfer more than $800m of the funds to accounts controlled by the previous operator of the block, Malabu Oil and Gas, controlled by a former Minister of Petroleum Resources, Dan Etete.

The lawsuit said that JP Morgan then transferred the funds to two accounts controlled by Etete, without sufficient due diligence to make sure the money did not leave accounts controlled by the Federal Government.

Reuters was unable to reach either Etete or Malabu for comments.

The filing seen by Reuters was made in London in November last year on behalf of Nigeria, and said that JP Morgan acted with gross negligence by allowing the transfer of the money without further checks.

It said JP Morgan should have known that, under Nigerian law, the money should never have been transferred to an outside company.

“If the defendant acted with reasonable care and skill and/or conducted reasonable due diligence, it would or should have known or at least suspected … that it was being asked to transfer funds to third parties who were seeking to misappropriate the funds from the claimant and/or that there was a significant risk that this was the case,” the filing said.

Late last year, a Milan judge ruled that Shell and Eni must stand trial in Italy, where Eni is headquartered, for a separate legal case in which Milan prosecutors alleged bribes were paid to Etete and others as part of the same oilfield deal, including money that went to Etete’s Malabu.

Both Eni and Shell have repeatedly denied any wrongdoing in relation to that case. Malabu has never commented on the case.

Shell last year said it knew some of its payment to the Nigerian government as part of the deal would go to Malabu “to settle its claim on the block”, but that it was a legal transaction.

There are also ongoing investigations regarding the deal in Nigeria and the Netherlands, where Shell is based.

Meanwhile, the US regulator, the Financial Industry Regulatory Authority, had in December fined JPMorgan $2.8m for improper safeguarding of Nigerian securities.

JPMorgan Chase & Co reportedly paid a $2.8m fine to the US regulator to settle charges that its broker-dealer unit lacked sufficient controls to safeguard customer securities from several countries including Nigeria over more than eight years.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

Economy

Citigroup Sees $60 Per Barrel Crude Oil in the Next 12 Months

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Citigroup Says Crude Oil Will Reach $60 Per Barrel in a year

Despite the current economic downturn and the projected second phase of COVID-19, Citigroup, a New-York based financial service company, has said oil price could hit $60 per barrel in the next 12 months.

Citigroup disclosed this on Thursday during a virtual EMEA Media Summit titled – ‘Navigating the Future: What’s Next in a Post-COVID-19 World’.

“After a substantial underperformance in the last six months relative to several other commodities, crude will eventually bounce back to around $60 per barrel over the next 12 months,” Max Layton, European Head of Commodities Strategy, Citigroup said while giving a presentation on the outlook for commodities in the second half of 2020, and into 2021.

This means Brent crude oil would rise by at least 50 percent from the current level of $42 per barrel in the next 12 months.

“It’s going to be a function of the demand and supply but recently we have been seeing a spike in the demand for some of the commodities,” said Atiq Rehman, Head of EMEA Emerging Markets, Citigroup.

“A lot of these economies are heavily commodity-dependent, and perhaps, in the past have been guilty of not diversifying when they come under pressure. I think perhaps, this recent moves will push them to diversify away from simply commodities,” Grant Carson, Head of TRUK And Non-Presence Countries, Citigroup, stated citing Russian as one of the countries that have recorded success in diversifying away from crude oil.

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Economy

Oil Sustains $42 Price Level as OPEC Output Drops to Over Two-Decade Low

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OPEC Oil Output Drops to Over Two-Decade Low in June

Crude oil sustained $42 per barrel price level following a recent survey conducted by Reuters that showed the Organisation for the Petroleum Exporting Countries (OPEC) managed to cut oil production to over two-decade low in the month of June.

According to the survey, OPEC’s 13 members pumped 22.62 million barrels per day in June, 1.92 million barrels per day below May’s revised figure. The lowest since May 1991.

OPEC and allies, together referred to as OPEC plus, had agreed to cut oil production by 9.7 million barrels per day in the month of April to rebalance the global oil market and prop up prices amid COVID-19 pandemic.

OPEC’s share of the 9.7 million barrels per day production cut was 6.084 million bpd but OPEC delivered 6.523 million bpd cut in the month of June despite the inconsistencies from Nigeria, Angola and Iraq.

In June, Saudi Arabia reduced production by 1.13 million barrels per day to 7.53 million bpd. While Kuwait and the United Arab Emirates met their quota but struggle to fulfill the extra cuts.

Nigeria, Iraq and Angola continue to struggle in the month of June. However, their performance improved compared to May as Nigeria attained 77 percent compliance level, up from 19 percent in May.

While Iraq and Angola achieved 70 percent and 80 percent compliance level, respectively. Nigeria and Iraq have pledged to cut more in July despite their economic challenges. Angola, however, said it would not be able to cut extra oil production until October.

Brent crude oil, against which Nigerian oil is measured, rose to $42.48 per barrel on Friday as at 2:58 pm Nigerian time.

UKOilDaily

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Economy

Nigeria Labour Congress Says No Fuel Increase Amid COVID-19 Pandemic

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No Fuel Increase During COVID-19 Pandemic, Says Nigeria Labour Congress

The Nigeria Labour Congress (NLC) on Thursday rejected the new fuel price announced by the Petroleum Products Price Regulatory Agency (PPPRA) on Wednesday.

In a statement issued by Ayuba Wabba, the President, NLC, the labour demanded instant reversal to the old price, saying the move will kill businesses and worsen the nation’s poverty level at a time when nations are looking to ease economic burden of their citizens and mitigate negative impacts of COVID-19.

The PPPRA had raised the value band of Premium Motor Spirit, commonly referred to as Petrol, to between N140.80 and N143.80 per litre on Wednesday because of the recent increase in crude oil prices.

Nigeria Labour Congress argued that “PPPRA contradicted itself when it said that the latest price increase described as an “advisory” was meant to regulate a product that government claims had been de-regulated.

“That this new hike in the pump price of petrol was announced without the approval of the board of the PPPRA and the oversight ministry speaks volume of the arbitrariness and public contempt in the operations of PPPRA. We find this deeply disturbing.

“It is also very embarrassing that the PPPRA boss, while trying to defend the indefensible, appeared to be out of sorts and ready to clutch at any available straws to sell his ice block merchandise to Eskimos.

“Apart from contradicting himself that PPPRA is still trying to regulate a deregulated product through ‘advisories’, the PPPRA went on to exert more nails on the coffin of his polemics when he argued that PPPRA was just like the Central Bank of Nigeria, CBN, and the National Insurance Commission, NAICOM, that would always act to protect the public interest.

“That was how far the niceties went. The rest of the statement by the PPPRA boss was about how PPPRA plans to protect investors and increase their profit.”

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