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More facts emerge on $1bn Malabu Oil deal

By The Citizen
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Federal Government's inconsistency in the allocation and revocation of Oil Prospecting Licence (OPL 245) between 1998 and 2001 is largely responsible for the controversy surrounding the payment of $1.092 billion to Malabu Oil, according to fresh details of the deal obtained yesterday.

The payment to the company owned by a former Minister of Petroleum Resources, Chief Dan Etete, bordered on violation of agreement.

Though the contract was first awarded by the late General Sani Abacha, it has been a recurring decimal through the subsequent administrations of Olusegun Obasanjo, Umaru Yar'Adua and Goodluck Jonathan.

The Resolution Agreements signed by the Federal Government with Malabu Oil, Shell Nigeria Ultra-Deep Limited, (SNUD) and Shell Nigeria Exploration and Production Company Nigeria Limited (SNEPCO) were approved by President Jonathan in 2011 following the amicable settlement of suits relating to OPL at the International Centre for the Settlement of Investment Disputes (ICISD Arbitration).

Signatories to the Malabu and SNUD Resolution Agreements, based on an April 29, 2011 presidential directive, were the then Minister of Finance, Mr. Olusegun Aganga ( now Minister of Trade and Investment); Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke; Attorney-General of the Federation, Mr. Mohammed Bello Adoke ( SAN); Vice-Chairman /Managing Director and Company Secretary of SNUD; and the then Group Managing Director of NNPC, Austin Oniwon and Company Secretary/ Legal Adviser, Director and Secretary of SNEPCO.

In its Claimant's Memorial before the International Centre for Settlement of Investment Disputes, Shell Ultra Deep Limited named those who were involved or intervened at various stages in the OPL 245 dispute with Malabu Oil and Gas as Obasanjo; ex-Minister of Petroleum Resources, Chief Edmund Daukoru; Ex-NNPC GMD, Gaius Obaseki; former DG of SSS, Col. Kayode Are; Special Assistant to the President on Petroleum Matters, Mr. Funsho Kupolokun; NAPIMS; JP Morgan; a board member of Royal Dutch Shell, Mr. Malcom Brinded; the then Director of DPR, Mr. Macaulay Ofurhe; and Assistant Director of DPR, Mr. Andrew Obaje

It was gathered last night that copies of the Malabu Oil Agreements had been forwarded by government to the British High Commissioner in Abuja and the US Ambassador.

The British Police had indicated interest in probing the deal.

Besides, principal officers of the National Assembly have been served copies of the agreements to enable them understand what a source described as reasons for the decision of government to resolve the disputes over OPL 245 instead of allowing the oil block lie fallow.

An introductory note on the controversy gave insight into how Malabu Oil and Gas became a stakeholder in the petroleum sector.

It said: 'Records indicate that Malabu, an indigenous Oil and Gas company was allocated OPL 245 in April 1998 by the FGN in furtherance of its Indigenous Exploration Programme Policy introduced in the early 1990s to encourage effective development of indigenous capability in the upstream factor of the oil industry.

'Malabu and other indigenous Oil and Gas companies were accordingly allocated Oil Blocks which they were expected to develop in partnership with international oil companies as Technical Partners.

'Malabu had in accordance with the terms of the grant, appointed Shell Nigeria Ultra Deep Limited (SNUD) as its Technical Partner.'

One of the agreements, shedding light on how the deal was struck, said: 'Whereas on the 29th of April 1998, the Federal Government of granted an Oil Prospecting Licence (OPL 245) over oil block 245(Block 245 to Malabu.

'On 30th March 2001, Malabu and Shell Nigeria Ultra Deep Limited (SNUD) entered into a Farm-in Agreement, and a Deed of Assignment under which Malabu assigned 40 per cent equity interest in OPL 245 to SNUD.

'On the 2nd July 2001, FGN revoked OPL 245. By a letter dated the 23rd May 2002, the then Honourable Minister of Petroleum Resources, on behalf of FGN awarded Block 245 to SNUD on the basis of a Production Sharing Contract (PSC) following a competitive bid with another international oil company, on the invitation of the FGN.

'On 22nd December 2003, Nigerian National Petroleum Corporation (NNPC) executed a PSC with SNUD (hereinafter referred to as the 2003 PSC ) granting SNUD the right to exclusively operate Block 245 as contractor for a term of 30 years.

'Subsequent to the revocation referred to in paragraph C above and the execution of the 2003 PSC, various law suits involving FGN, Malabu, and SNUD, were filed to determine disputes arising from the revocation of OPL 245 by the FGN, the termination of the agreements between Malabu and SNUD and the execution of the 2003 PSC in respect thereof, with SNUD.

'On 30th November 2006, the FGN executed a settlement agreement with Malabu wherein the FGN, without admission of liability for any alleged wrongful, unlawful, unjust or any like conduct agreed to re-allocate Block 245 to Malabu in consideration of Malabu discharging and releasing the FGN from all claims and suits filed by Malabu against the FGN in connection with the revocation of Malabu's interest on 2nd July 2001.

'As a result of the execution of the settlement agreement, a number of dispute resolution proceedings were initiated by SNUD against FGN and/ or Malabu, including Bilateral Investment Treaty (BIT) arbitration No. ARB/07/8 pending at the International Centre for the Settlement of Investment Disputes ( ICSD Arbitration) to enforce SNUD's rights to exclusively operate Block 245 as Contractor on the basis of the2003 PSC beaten NNPC and SNUD.

'The cases remaining between FGN, Malabu and SNUD are (I) CA/A/25M/ 2003- SNUD vs. The House of Representatives and Malabu ; (ii ) ICC No. 12136 MS(C12137 MS) SNUD vs. Malabu ( Arbitration with resulting award in favour of SNUD delivered on 20th December 2004 and costs of $2.735million awarded against Malabu; iii FHC/NRJ/ 01/2009-SNUD vs. Malabu, by which the ICC Award was registered on 29 March 2010, making it enforceable in Nigeria; iv ICSD Case No. ARB/07/18-Bilateral Investment Treaty arbitration between SNUD and the FGN (Ruling pending).

'On 2nd July 2010, FGN again issued a letter to Malabu, re-allocating Block 245 to Malabu. FGN has decided to resolve its differences with Malabu amicably with respect to Block 245.

'Pursuant to paragraphs above and with the full concurrence and agreement of Malabu, FGN is willing to reallocate Block 245 to Nigerian Agip Exploration Limited (NAE) and Shell Exploration and Production Company Limited (SNEPCO) in accordance with the terms of a reallocation agreement of even date to be entered into between FGN, SNUD, SNEPCO, NAE AND NNPC (Reallocation Agreement).

'Now therefore, FGN and Malabu have agreed as follows with respect to Block 245:

'All existing, claimed, asserted or disputed rights and privileges of Malabu, contracts and arrangements arising from or pursuant to Blick 245 whether such rights and privileges existed, are claimed, asserted or disputed among themselves, or against the whole world ( including SNUD or any party claiming through SNUD) shall at the Execution Date, be substituted by the following arrangement.

'FGN agrees to pay to Malabu subject to Clause 2 and 3, the sum of US $1.092,040,000 in full and final settlement of any and all claims, interests or rights relating to or in connection with Block 245.

'Malabu, as stipulated in Clause 4 herein settles and waives any and all claims, interests, or rights relating to or in connection with Block 245 and hereby consents to the reallocation of the interests in Block by the FGN as granted in Clause 1.3 herein.' The Nation