Chika Amanze-Nwachuku
14 June 2007
Lagos — The Federal Government has restored the controversial Oil Prospecting Licence (OPL 245) originally awarded to Malabu Oil and Gas Ltd, a company owned by former Minister of Petroleum Resources, Chief Dan Etete, after the company offered to pay $210 million Signature Bonus.
The licence for the oil block which was obtained by the company in 1998 when Etete was minister, was revoked in July 2001, over the company's alleged failure to fully pay the required signature bonus. This has generated a series of controversy and litigations over the years.
The decision to revert the acreage to the company followed an out-of-court settlement of the dispute between it and the Federal Government. According to the settlement terms, the signature bonus is to be paid within 12 months, from December last year when the parties agreed to the terms.
Although, industry sources alleged that Etete awarded the highly prolific block to his company without due process while he was minister, Malabu maintained that it applied and obtained the licence, following government's call for indigenous participation in the upstream sector of the oil industry.
According to the company, the OPL 245 was granted to it in April 1998 on conditions which included a clause that foreign participation in the block should not to exceed 40 per cent. The company further claimed that it complied with all the conditions including the payment of the application fee of N50,000; bidding fee of US$10,000, part payment of signature bonus/reserve valued $2,040,000.
It was learnt that the company thereafter carried out a 2D seismic survey on the block, after which it entered into agreement with Shell Nigeria Ultra-Deep Ltd, consequent upon which Malabu assigned 40 per cent participating interest in the block to the Shell, which it also appointed as its technical partner.
But in a twist, the oil licence was revoked via a letter by the Department of Petroleum Resources (DPR), dated July 2, 2001 and all efforts by the company to make the government rescind its decision yielded no result.
The company had accused Shell of frustrating its efforts at getting the government change its decision, alleging that Shell wanted the government to allocate the acreage to it.
Consequently, Malalu briefed its solicitors to write Shell and Exxonmobil on the suspicion that the former, its technical partner, was in "secret talks" with the government for a selective bidding process with Exxonmobil.
Shell was said to have thereafter sought to terminate the agreement with Malabu, but the company declined. The development prompted Shell to institute a proceeding against Malabu before the International Chamber of Commerce Arbitration. On its part, Malabu approached a United States Court to challenge the revocation, as well as the purported re-award of the block to its technical partner (Shell).
Aside from the US litigation, the company also filed another suit against the Federal Government and Shell before a Federal High Court, Abuja, following an alleged plan by the Government and Shell to consummate the deal while the action was pending in court. The government, it was further revealed, had entered an escrow agreement with Shell for the payment of $210 million and the signing of a production sharing contract over the oil block was carried out notwithstanding the pending litigations.
But after a prolonged legal battle within and outside the country, the parties agreed to amicably resolve their dispute out of court.
Consequently, the parties agreed that the OPL 245 has completely returned to Malabu Oil and Gas Ltd, the federal government has informed Shell of this development and has offered it (Shell) an alternative oil acreage, and that Malabu is expected to pay the federal government a signature bonus of $210 million posted by Shell.
The agreement was contained in various letters written by the former Attorney General of the Federation, Chief Bayo Ojo and the former Energy Minister, Dr. Edmund Daukoru.
The government, according to some of the correspondences exclusively obtained by THISDAY yesterday, had asserted the restoration of the acreage to Malabu and categorically advised Shell to stop laying further claim to it.
Indeed, the Attorney General of the Federation (AGF) in a letter to Daukoru, dated March 16, titled "Re: Restoration of OPL 245 to Malabu Oil and Gas Ltd By the Federal Government", had noted that the Federal Government received a complaint from counsel to Malabu that Shell was still laying claim to the oil block and reaffirmed that the ownership of the OPL 245 has been restored back to Malabu, following the out-of-court settlement of the dispute by parties.
The terms of settlement agreement signed by the company and the federal government restored the block wholesale and completely subject of course to payment of the signature bonus of $210 million by Malabu.
"Accordingly, the ownership of the block is that of Malabu and therefore same is no longer in dispute and Shell should be so advised," the AGF had said.
Also in a letter to Malabu dated April 11, Daukoru averred that the acreage had been reverted to Malabu and asserted that the decision by the government was irreversible.
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