London, UK | – China’s state-owned Addax Petroleum has agreed to pay a 31 million Swiss francs ($32 million) fine in Geneva, Switzerland, to settle charges of suspected bribes given to Nigerian officials, thus ending a four-month old investigation, which uncovered the illegality in the payments.
This is coming as oil prices Wednesday fell more than two per cent to end their longest rally in more than five years.
The drop was attributed to increases in oil production from Nigeria and Libya, said to have added to the volumes of light, sweet crude looking for buyers in the Atlantic Basin, despite a supply cut led by the Organisation of Petroleum Exporting Countries (OPEC) aimed at reducing the excess inventory in the oil market.
The Geneva Prosecutor’s Office, which investigated Addax Petroleum, had also confirmed the criminal investigation into allegations concerning its operation in Nigeria.
The investigation had led to the arrest of the company’s chief executive officer of its Geneva Office, Zhang Yi, and the legal director, who were also charged over several millions of dollars in payments to an unnamed company and several lawyers in Nigeria.
Reuters quoted the Geneva Prosecutor’s Office as saying in a statement yesterday that the four-month investigation found that the payments were not sufficiently documented and doubts remained on their legality.
The statement, however, added that no criminal intent was established against Addax Petroleum, which was bought in 2009 by China’s state-owned Sinopec, Asia’s largest oil refiner and third largest in the world.
The Geneva Prosecutor’s Office said that Addax acknowledged possible organisational shortcomings and had taken measures to improve internal anti-corruption procedures.
With this settlement, the cases against the CEO and legal director have also been closed, a spokesman for the prosecutor said.
Addax said in an emailed statement that its CEO had resumed his duties, while its chief legal officer retired on June 30.
“Addax Petroleum is committed to conducting its business with the highest level of integrity, and in full compliance with applicable laws, regulations and industry standards,” the company said in a statement.
In a related development, oil prices fell more than two per cent yesterday, ending their longest bull-run in more than five years, as climbing OPEC exports and a stronger dollar reversed the gains made in recent days.
Benchmark Brent crude futures were down $1.14, or 1.3 per cent, at $48.47 per barrel wednesday after the price had climbed for eight straight sessions to Monday.
United States’ West Texas Intermediate (WTI) crude futures were also down $1.35, or 2.8 per cent, at $45.72 a barrel.
Oil exports by OPEC climbed for a second month in June, with the cartel exporting 25.92 million barrels per day (bpd) in June, up 450,000 bpd from May and 1.9 million bpd more than a year earlier.
The rise in exports comes despite OPEC’s vow to rein in production until March 2018.
Nigeria and Libya, which are exempted from the output pact, have continued to pump more oil.
Nigerian crude for August loading is said to be proving slow to find buyers amid rising supply, as an increase in production in the two countries, is adding to the glut in the global market, despite the OPEC-led cut.
Reuters quoted oil traders as saying that there are at least 40 unsold August-loading Nigerian cargoes looking for buyers, the equivalent of almost half of daily world demand.
Lingering cargoes of crude from Nigeria is said to have been a feature of the oil market this year, weighing on prices since Nigeria’s crude is sold in relation to Brent, the global benchmark.
Nigerian exports are set to exceed 2 million barrels per day (bpd) in August, a 17-month high, and on Tuesday the head of the International Energy Agency (IEA) said further increases by key producers could hamper the rebalancing.
Traders were also quoted as saying that some Nigerian crude grades for August were selling well, especially the distillate-rich Forcados crude, which has only 10 cargoes remaining for July loading.