On April 29 1998, the federal government of Nigeria awarded an Oil Prospecting Licence (OPL) 245 to Malabu Oil & Gas Ltd. for $20 million. The license covers a defined deep-water offshore area over 1,000 m below sea level and approximately 150 km off the Niger Delta.
As awards go, however, this has turned out to be a poisoned chalice. It’s been a constant source of litigation for successive governments due to allegations surrounding fraud and corruption in awarding the licence. The FG may have finally thrown in the towel based on the latest reports.
The Cable has reported that Abubakar Malami, the attorney-general of the federation (AGF) and minister of justice, has written a memo to President Muhammadu Buhari asking the federal government to end all cases relating to OPL-245 because it has little chance of winning.
Timeline of events
Here’s a timeline of key events over the last 25 years.
The FG awards OPL 245 for $20 million to Malabu Oil and Gas. The company belonged to Dan Etete, an associate of the former head of state, Sani Abacha and a former petroleum minister who served between 1995 and 1998. Etete awarded the license to himself using false identities.
[Dan Etete (right) / picture-alliance/dpa/G. Barbara]
Nigeria is in its Fourth Republic under the administration of Olusegun Obasanjo. On behalf of Malabu, Etete pays $2.04 million for the OPL 245 licence out of the $20 million the company had agreed to pay.
Shell signs an agreement to acquire a 40 per cent stake in OPL 245 from Malabu. The agreement was on the condition that Shell would pay the outstanding $18 million to the FG.
The FG revokes Malabu’s OPL 245 licence. This sets off a series of litigations over its ownership.
Shell informs Malabu that its contracts have been frustrated by the revocation of the licence. Shell is officially awarded 40 per cent of OPL 245. It starts exploration and appraisal work and later signed a production-sharing deal with the Nigerian National Petroleum Corporation (NNPC). Under the deal, Shell Nigeria Ultra Deep (SNUD) agrees to pay a $209 million signature bonus, placed in an escrow account until the Malabu dispute is resolved.
Shell goes to the International Court of Arbitration (ICC) to file a case against Malabu based on terms of the March 2001 agreement.
The House of Representatives (HOR) orders Shell to pay Malabu $550m for damages resulting from the revocation of the OPL 245 license. It also asks the FG to return the licence to Malabu. The FG refuses to comply.
The ICC rules in favour of Shell.
Malabu settles with the FG. It agrees to pay $218 million to the FG in return for the licence being fully reinstated to Malabu. Malabu, however, fails to pay.
Shell (SNUD) commences Bilateral Investment Treaty arbitration against the FG for wrongful expropriation.
The FGN promises Shell a new prospecting licence in other blocks, worth 50 per cent of OPL 245. Shell declines.
The FG seeks a resolution, and negotiations commence.
Mohammed Abacha, son of the former head of state, enters the ring. He launches a legal challenge arguing that Etete pushed him out of his partial ownership of Malabu.
Eni proposes to Malabu and Shell to buy a stake in OPL 245. Malabu refuses.
April 29, 2011
Malabu, Shell, Eni, and the FG reach a resolution. Malabu agrees to hand OPL 245 back to the government for $1.092 billion. Shell and Eni agree to pay the FG $1.092 billion and a signature bonus of $208 million, bringing the total payment for OPL 245 to $1.3 billion.
[An oil rig / The Cable]
May 20, 2011
The $1.092 billion is placed in an escrow account opened by the FG with JP Morgan Bank. $875 million is transferred to Malabu bank accounts.
A former Russian diplomat Ednan Agaev, claims Malabu owed him millions of dollars for arranging meetings with Shell and Eni.
The HOR votes to cancel the OPL 245 deal.
FG sues JP Morgan in London for its role in transferring the $875 million to Etete’s Malabu, alleging negligence.
The main trial in Milan starts.
A Nigerian judge issues arrest warrants for Dan Etete.
A London judge rules that the Nigerian lawsuit against JP Morgan can go to a six-week trial.
March 17, 2021
A Milan court acquits all the defendants in the Italian trial.
What did Malami tell Buhari?
In the AGF’s memo to Buhari dated February 6, he listed a lengthy series of losses that the FG has faced over the OPL-245 matter. They included defeats in the UK, US and Italy, where the courts ruled in favour of Eni and dismissed any fraud cases against Eni and JP Morgan.
Malami asked Buhari to settle all civil and commercial cases between the FG and Eni and to convert the OPL to an Oil Mining License (OML), which, in Malami’s words, would help Nigeria take “advantage of the fast-disappearing opportunities in the oil exploration industry.”
What else should I know?
[Mohammed Abacha / Channels]
The case involving Mohammed Abacha hasn’t been resolved. The EFCC is recommending that Eni pays $500m to the Abacha family. A former AGF, Mohammed Adoke, in 2017 said that even if Abacha had a claim to the oil field, he had to forfeit them to the FG.
His words: “By Decree No 53, the (Abacha) family had forfeited all identified assets to the federal government. All undeclared assets were also forfeited.
“People should ask if, in a decent country, the children of Abacha could come out openly to say ‘we own OPL 245’ when their father awarded the oil block. Should they have been so confident to lay that kind of a claim?
“Why has the EFCC not gone after them to ask how they acquired an interest in OPL 245? If not that the political environment is conducive for them, they wouldn’t raise their head to be making such claims.”
It remains to be seen if Buhari will approve this $500m payment to Abacha or whether he’ll pass the ball to the new administration. Whatever the case, it’s a relief that Nigeria can have some closure over the controversial OPL-245.