A United Kingdom (UK) court, on Friday May 22, 2020, threw out a $1.1 billion lawsuit instituted by the Nigerian government against oil giants, Royal Dutch Shell and Eni, with respect to a dispute over the OPL 245 oil field.
The Nigerian government, who filed the case at a commercial court in 2018, alleged that the two multinational oil firms were aware that $1.1 billion from the payment made to secure an oil license was used for bribes and kickbacks.
The UK judge in charge of the case dismissed it on the grounds that the UK court did not have jurisdiction to try the lawsuit, just as it had the same facts for which Shell and Eni were currently undergoing trial in an Italian court.
In 2011, Shell and Eni, paid $1.3 billion to the Nigerian government for the acquisition of an oil block prospecting license. However, it was alleged that about $1.1 billion of that amount ended up in the account of Malabo Oil and Gas, which was owned by the then Petroleum Minister, Dan Etete and was used to pay political bribes.
He was alleged to have secretly awarded the oil fields to Malabo which he owns. Both oil firms have however, consistently denied being aware that the money would be used as bribes, but a report alleged that senior Shell executives were briefed on how the money would be used.
Shell and Eni are already being investigated over the matter. In February 2016, Italian and Dutch prosecutors began a formal investigation into the activities of Shell in acquiring OPL 245 having already began investigations on Eni officials in 2014.
Shell and Eni are still on trial in Milan under the Italian legislation that mandates that companies will be liable for crimes committed by directors and executives when a suspected unlawful conduct has benefitted the legal entity.
While the Italian trial is in its final stages, other lawsuits are pending elsewhere over the same Nigerian oil deal.
A spokesman for Nigeria expressed the country’s disappointment at the court’s decision to decline jurisdiction. He said that the country would continue to support the criminal proceedings still going on in the Italian court and seek permission to appeal the decision in UK court.
FG’s plan for N350 billion revenue from oil field licensing suffers setback
The 2 marginal fields–the Ororo field, known as OML 95, and the Dawes Island marginal oil field, formerly called OML 54–were among 11 oil licenses that were revoked by the Department of Petroleum Resources (DPR) in April.
The Federal Government’s plan to boost its revenue in the face of dwindling oil prices seems to have suffered a setback, as two Federal High Court judges have blocked the government’s effort to revoke two oil field licenses.
This will negatively affect the full licensing round for marginal fields, which the Federal Government plans to launch in the month of June.
The 2 marginal fields–the Ororo field, known as OML 95, and the Dawes Island marginal oil field, formerly called OML 54–were among 11 oil licenses that were revoked by the Department of Petroleum Resources (DPR) in April. These oil fields were part of the initial 56 fields in the marginal field licensing round.
Justice Oluremi Oguntoyinbo of the Federal High Court in Lagos, on May 29, granted the order of interim injunction against the Minister of State for Petroleum Resources and the Ministry, following a May 18 ex parte application filed by Euratic Energy Ltd for the Dawes Island marginal field, which is located in the swamp terrain about 15km southwest of Port Harcourt, Rivers State.
The Judge had restrained the defendants, i.e., the Ministry of Petroleum Resources, from disposing, offering, selling, alienating, dissipating, attaching or assigning the Plaintiff’s assets of the Dawes Island marginal oil field.
As for the Ororo marginal field, the presiding Judge of a Federal High Court in Lagos, Muslim Sule Hassan, on May 28, granted an order of interim injunction against the defendants, following a motion ex parte filed by Owena Oil and Gas Ltd.
Justice Hassan ordered the parties to maintain status quo in relation to the revocation of the oil license, pending the determination of the motion on notice pending before the court.
This means that the petroleum ministry will not be able to include these oil fields in the planned marginal fields licensing later this month.
Both the Ministry of Petroleum and the DPR did not immediately comment on the new development.
Sometime last month, the Federal Government had disclosed that it was going to delay major licensing rounds for the marginal oil fields due to the coronavirus pandemic. This has seen the revenue projection from signature bonuses drop from N939 billion to N350 billion.
It was reported that the Federal Government, in April, revoked the mining licenses of 11 oil and gas firms operating in the marginal fields over their inability to turn the assets around, despite being given enough time.
The government said that it was in the best interest of the country to revoke those licenses, as there was urgent need to derive maximum value from available resources, especially in the face of dwindling revenue.
Just In: PPPRA reduces petrol price to N121.50 per litre
“After a review of prevailing market fundamentals in the month of May and considering marketers realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price…”
The Petroleum Products Pricing Regulatory Agency (PPPRA) has announced a new retail price band for oil marketers.
In a circular dated May 31st, as seen by Nairametrics, the downstream regulator said oil marketers are now expected to sell petrol within the price range of N121.50 and N123.50. Part of the circular said:
“Please recall the recently approved pricing regime which became effective March 19, 2020, and the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell PMS at the retail stations.
“After a review of prevailing market fundamentals in the month of May and considering marketers realistic operating costs as much as practicable, we wish to advise of a new PMS guiding pump price with the corresponding ex-depot price for the month of June 2020, as follows; price band N121.50 – N123.50 per liter.”
Measures introduced by Nigeria to ensure transparent use of the $3.4 billion IMF loan
Most of the critics of the government’s borrowing pattern have often expressed serious doubt about the judicious use of these funds, as they believe most of them might end up being embezzled.
Following the approval and disbursement of $3.4 billion Rapid Financing Instrument (RFI) to Nigeria, which is the largest COVID-19 emergency financing package so far released by the International Monetary Fund (IMF), the multilateral financial institution now expects transparent and accountable use of the funds.
The IMF’s financial assistance to Nigeria is meant to support the healthcare sector, stabilise the economy, and protect jobs and businesses that have been severely impacted by the pandemic.
The Bretton wood institution has been disbursing funds to work closely with member countries to ensure transparent and judicious use of the financial support, while making sure they are used for the intended purpose.
The IMF’s mission chief for Nigeria, Amine Mati, during a conversation, pointed out the measures to be taken by Nigeria in order to enhance transparency and governance in the use of the $3.4 billion IMF emergency financing.
According to the IMF chief, the Nigerian Government had committed to undertake an independent audit of crisis mitigation spending and related procurement processes, as well as to publish procurement plans and notices for all emergency response activities which include the names of companies that were awarded the contracts and the beneficial owners.
Mr. Mati also disclosed that special budget lines are to be created to record all crisis emergency response measures, which are published daily on Nigeria’s treasury online portal. These measures will not only ensure that financial assistance received as part of the COVID-19 response is used for its intended purposes, but will also significantly strengthen the oversight of the entire budget used for the government’s crisis response.
— IMF (@IMFNews) May 31, 2020
Implementing these measures will help to drastically reduce the governance and transparency challenges as well as corruption vulnerabilities of a country like Nigeria. Most of the critics of the government’s borrowing pattern have often expressed serious doubt about the judicious use of these funds, as they believe most of them might end up being embezzled.