A new twist has been introduced to the ongoing criminal trial of the Oil Processing License, OPL 245 offshore field as Multinational Petroleum Oil And Gas giant, Royal Dutch Shell, one of the key figures in the middle of what has now been termed as ‘unprecedented corporate corruption trial’ in the oil and gas sector, announced that it would write down its investment in the offshore field in Nigeria.
A write-down is the accounting term used to describe a reduction in the book value of an asset due to economic or fundamental changes in the asset, thus becoming an impaired asset.
Shell announced the write-down during its second-quarter 2020 earnings call on Tuesday. The company had recorded losses in its upstream division, including a post-tax impairment charge of $4.7 billion related to write-downs of the Malabu oilfield, and assets sales in North America and Brazil.
The company also announced that its upstream division had losses of $6.7 billion, due to a 7% fall in production to 2.4 million barrels a day. However, adjusted earnings for the second quarter fell to $600 million compared to $3.5 billion this period last year.
The OPL license has been at the heart of protracted litigation in Italy after prosecutors alleged corruption. Shell bought the oilfield alongside an Italian company, Eni, in 2011. Together, they paid $1.3 billion. The payment was to a company called Malabu, which was owned by Nigeria’s former Oil Minister Dan Etete. However, Italian prosecutors claim that most of the payments were kickbacks to Nigerian government officials.
The prosecutors have, therefore, called for an 8-year prison sentence for former Eni CEO, Paolo Scaroni. Both companies have been fined $1.04 million and prosecutors seek the confiscation of $1.092 billion from the defendants of the case.
The prosecutors also called for jail terms ranging from ten to five years for all principal actors in what has now been termed as ‘unprecedented corporate corruption trial’.