Malabu Oil: Ruling On Shell, AGIP Applications Stalled

malabuThe Ruling on two separate applications filed by Shell Oil exploration Nigeria LTD and Agip Oil seeking to vary an order made by the Federal High Court in Abuja, on January 26, 2017, which granted temporary forfeiture of the oil prospective license 245 bloc to the Federal Government has been stalled.

The ruling could not go on because of the three fresh applications filed by Malabu Oil, principally seeking to be joined in the suit as well, as a party in the already heard applications filed by Shell and Agip.

Counsel to Malabu Oil, Mr. Abdullahi Haruna told Justice John Tsoho that, the joinder application was aimed at delaying the ruling in the application filed by the two oil giant, so Malabu Oil can become one of the plaintiff in the suit.

However, the application was objected by lawyers to Agip and Shell because it is frivolous and a waste of the courts time.

Counsel to the Economic and Financial Crimes Commission (EFCC), Johnson Ojogbane, did not file any application but rather left the issue at the court’s discretion.

Nevertheless, after taking submissions from counsel, Justice John Tsoho adjourned the ruling on Malabu’s application to March 17, 2017.

British Police Probe Shell, ENI Over Sale Of $1.3 billion OPL 245 In Nigeria

British police are investigating a money-laundering allegation related to a big oil field bought by Shell and ENI from Nigeria for $1.3 billion, after most of the cash they paid ended up in a company linked to former Minister of Petroleum, Dan Etete.

The probe concerns offshore block OPL 245, which industry sources say contains up to 9.23 billion barrels of crude – more than enough to keep China running for two and a half years – the ownership of which had been in dispute for more than a decade.

“The proceeds of Crime Unit is investigating a money-laundering allegation in the UK in connection with OPL 245. The investigation is at an early stage,” a UK spokesman said.

Transparency campaigners, who asked the UK to look into the matter, assert that Shell and ENI used the Nigerian government as a go-between to obscure the fact that they were dealing with former oil minister Dan Etete, who also has a 2007 money-laundering conviction in France related to bribes he was alleged to have taken when in government.

In his capacity as Minister of Petroleum, Etete awarded block OPL 245 in 1998 for a payment of just $2 million to Malabu Oil and Gas, a company in which he played a prominent role.

The critics claim that Shell and ENI, which haven’t been accused of any legal wrongdoing, wanted to distance themselves from Etete given his reputation and his involvement in the original award of the oil block to Malabu.

A Shell spokesman told Reuters it had purchased the block from the government, making no payment to Malabu, and that it acted transparently and in accordance with Nigerian law.

ENI declined to comment to Reuters, but it told shareholders in May that the transaction was with the government, not Malabu.

Reuters was not able to locate Etete for comment. His lawyer did not immediately respond to a request for comment.

While Shell and ENI say they bought the block from the Nigerian government, for which they paid it $1.3 billion in 2011, the federal government says it was helping resolve an ownership dispute over the block between Shell and Malabu and immediately transferred $1.09 billion from the sale to Malabu. The government retained the remainder.

Etete had awarded the block to Malabu during the rule of military dictator Sani Abacha, whose son Mohammed and other close allies were shareholders in the company. That deal was later annulled after the death of Abacha by a new government that judged the award improper.

In a UK court case brought by Emeka Obi against Malabu for unpaid fees relating to his help in brokering the Shell/ENI deal, the judge in that case, Justice Elizabeth Gloster, concluded in her ruling last week that “From its incorporation and at all material times … Etete had a substantial beneficial interest in Malabu.”

Etete said he was only a consultant to the company, but he represented the company in the court case and in all negotiations with the oil majors, and he told the court he was the sole signatory to its accounts.

Documents relating to Obi’s London case show that both Shell and ENI met several times with Etete to negotiate the deal. An email from a Shell employee to another middleman recounts how he met Etete for face-to-face negotiations over “lots of iced champagne”.

Obi said in court he approached ENI on Malabu’s behalf on December 24, 2009, and introduced Etete to an ENI representative to discuss the deal.


Global Witness campaigner Tom Mayne said: “It’s obvious from the meetings Shell and ENI both had with Dan Etete that they knew he was the person to speak to and then agreed that the deal be structured in such a way that it went through the government.”

Babatunde Oluajo, national secretary of Zero Corruption Coalition, told Reuters his Nigerian campaign group had asked the UK government to look into the matter.

“In regard to our … commitment to the fight against corruption in Nigeria … we wish to … formally request for a full investigation into the activities of … companies and individuals in the procurement of the OPL 245 in Nigeria,” reads a letter the group sent to the UK High Commissioner on July 5.

Nigerian lawmakers also began investigating the deal last week to ascertain if Attorney General Mohammed Aboke, who helped finalise the deal with Eni and Shell, had acted properly, as his involvement only came to light in the London court case.

Aboke said he was acting in the interests of all parties to facilitate a deal and end the long-running ownership dispute over the oil block. He also said in a press report last week that resolving the dispute would help the government attract investment into the oil and gas sector.

The investigations highlight the regulatory risks faced by oil companies doing business in African countries with a history of weak governance and endemic corruption.

In the five years Abacha was in power, he liberally dished out oil blocks to political allies and is suspected of having enriched himself to the tune of about $4 billion before he died.

Malabu had been registered on April 24th, 1998, five days before Etete awarded it block OPL 245. Three months later, Abacha died.

Though Malabu’s original shareholders had been Abacha’s son and allies – and Etete himself, according to the British judge in Obi’s court case – the company secretary Rasky Gbinigie told the court he had lost all the documents showing who owned it now.

The ownership of OPL 245 had also been unclear ever since the government annulled the initial award to Malabu in 2001, and then awarded it first to Shell and then back to Malabu after a series of court cases.

Shell was still pursuing action to recover the block when it finally struck the deal to buy it with ENI in 2011.

Adoke defends FG’s role in Malabu deal

The Attorney General of the Federation and Minister of Justice, Mohammed Bello Adoke on Friday defended the role played by the Federal Government over the controversial circumstances surrounding a $1.09 billion oil block.

The Attorney General of the Federation and Minister of Justice, Mohammed Adoke

The minister said the Federal Government’s role was that of mere facilitator of an amicable settlement between two disputing parties.
Mr Adoke made this known in Abuja on Friday when he appeared before the House of Representatives Ad-hoc Committee on Transactions on the sale of OPL245.

The ad-hoc committee organised an investigative hearing on transactions involving the Federal Government, Shell/Agip and Malabu Oil and Gas Ltd in respect of the oil block.

“I wish to reiterate that government has over time demonstrated its commitment to attracting investment in the oil and gas sector of the economy.

“The government is also encouraging genuine investors, local and foreign by creating an enabling environment for their businesses to thrive.

“The resolution of the lingering dispute over block 254 was in furtherance of that objective,” Mr Adoke stated.

He said the Malabu and other indigenous oil and gas companies were allocated oil blocks which they were expected to develop in partnership with international oil companies as technical partners.

He, however, noted that at the time of awarding the oil block to Malabu in 2001, the company did not have the requisite financial muscle to meet the initial financial requirements.

He said that a lot of interplay occurred in considering Malabu for the allocation.

According Mr Adoke, Malabu was issued a licence for block 245 in April 2001, which he, said was subsequently revoked by the Federal Government on July 2001.

He said that Malabu contended that the subsequent re-awarding of OPL 245 to SNUD by the Federal Government was done under questionable circumstances.

Malabu petitioned the House of Representatives Committee on Petroleum to look into the matter.

Mr Adoke said further that Malabu also instituted a suit before the Federal High Court to enforce its claim to OPL254.

He said that the suit was struck out by the Federal High Court, and an appeal was lodged before the Court of Appeal in Abuja.

During the appeal, an amicable settlement was entered into between Malabu and the Federal Government in compliance with the terms of settlement executed by the parties on November 30, 2006.

He said that SNUD was not satisfied with the terms of the agreement entered into with Malabu and the government.

Mr Adoke said that to resolve all contending claims, a resolution agreement dated April 29, 2011 was executed where the Federal Government agreed to resolve all the issues with respect to block 245.

“A resolution agreement was dated April 29, 2001 and was executed wherein the Federal Government agreed to resolve all the issues with Malabu with respect to block 245 amicably.

“Malabu also agreed that it would settle and waive any and all claims to any interest in OPL 245,” the minister said.

He said that Malabu consented to the re-allocation of block 245 to Nigerian Agip Exploration Ltd and Shell Nigeria Exploration and Production Company Ltd.

“The role played by the Federal Government and its agencies in relation to block 245 was that of facilitator of a long-standing dispute between Malabu and SNUD over ownership of right to block 245,” Adoke said.

In a remark, the Chairman of the Ad-Committee, Leo Ogor (PDP-Delta), said that the investigative hearing was a fact- finding to assist in addressing salient issues regarding the transactions.

He said the House of Representatives was saddled with the responsibility to protect the interest of Nigerians.

“Our responsibility is to give a fair report and we will try to protect our local industry, local content and encourage indigenous participation in our oil and gas sector.

“We believe in our indigenous companies,” he emphasised.

Ogor said that the committee would come out with a thorough report on the hearing.

Senate to probe $1.092 billion Malabu oil deal

The Senate on Thursday resolved to investigate the alleged sale of oil Block, OPL 245 to Malabu Oil and Gas Limited at $1.092 billion (about N178.812billion) by the Federal Government.

This resolution followed a motion moved by Ahmed Abdul Ningi (Bauchi Central) and supported by 46 other senators pointing out the legal and ethical issues arising from the transaction and pattern of distribution of proceeds to the beneficiaries.

Senator Ningi argued that the investigations should be conducted by an ad-hoc committee constituted by the Senate because issue involved oil resources, bank transactions and also raised issues of corruption.

He said Nigeria signed up to the Global Extractive Industries Transparency Initiative (EITI) in 2003 and began implementation in 2004 and that the country later supported the policy with the Nigerian Extractive Industry Transparency Initiative (NEITI) Act 2007.

According to the Senator, the objective of the Act as encapsulated in Section 2(a and c) of the Act, included ensuring due process and transparency in payments made by all extractive industry companies to the Federal Government and statutory recipients.

Senator Ningi insisted that the Act also seeks to eliminate all forms of corrupt practices in the determination, payment, receipts and posting of revenue accruing to the Federal Government from the extractive industry companies.

He expressed worries over recent clamour for a review of “circumstances surrounding a tripartite transaction involving the Federal Government, Shell/Agip as well as Malabu Oil and Gas Limited in respect of Oil Bloc referred to as ‘OPL 245’ to the effect that the Federal Government purported to sell OPL 245 to Shell/Agip Consortium in the sum of 1,092,000.000 United States Dollars.”

Despite an objection by Heineken Lokpobiri, the senate referred the motion to the senate’s selection committee to determine which of its standing committees should handle the probe.

The Red Chambers thereafter adjourned plenary till September 17, 2012.