Business
Malabu’s settlement raises hope of $6bn revenue for Nigeria
…as Eni SpA, Shells prepare to resume oil exploration
After 25 years of raging battle for the control of the controversial OPL 245 (popularly known as Malabu oil block), its ghost has finally been laid to rest, sparking hope of resumption of oil explorations in the block.
Business Hallmark reliably gathered that the Federal Government has decided to terminate all legal cases encumbering the take off of crude exploration in the block.
It would be recalled that Oil Prospecting Licence (OPL) 245 was awarded to Malabu Oil and Gas, RC 334442 owned by former petroleum resources minister, Dan Etete, on April 29, 1998 during a licensing round conducted by the administration of late former military head of state, General Sani Abacha.
The bidding exercise was, however, rocked by controversies, with critics questioning the award of the massive oil block, which accounted for one quarter of Nigeria proven oil deposits to a relatively unknown and inexperienced entity registered only three weeks to the bidding exercise.
Oil companies that lost out in the bidding process, as well as whistle blowers in the Ministry of Petroleum and Department of Petroleum Resources (DPR), BH gathered, started leaking official documents linking Malabu Oil and Gas to General Abacha and members of his family.
Evidences were also produced to show that Dan Etete only paid $2 million out of the signature bonus of $20 million it was legally required to pay to government within 30 days of it getting the licence.
Despite the protests, the military government of late Sani Abacha refused to cancel the controversial exercise, affirming Malabu Oil as the authentic winner of OPL245.
Dan Etete, former Minister for Petroleum Resources, under whose watch the crime was allegedly committed.
Unfortunately for Malabu and its sponsors, the unexpected death of General Abacha on June 8, 1998, 41 days after the bidding exercise, threw spanners into their well hatched plans.
Barely two years after coming into power, former President Olusegun Obasanjo in 2001 cancelled the Malabu license on the basis that the allocation was fraudulently acquired, reverting ownership to the government.
The cancellation birthed a vicious legal battle, with Malabu going to court to vacate the order. While the controversy lasted, the oil block remained in limbo, with no exploration activities recorded.
In 2011, hope of an amicable solution finally appeared when the administration of former President Goodluck Jonathan decided to sell OPL 245 to Shell and Eni, Dutch and Italian oil giants, for $1.1billion and another $207million as signature bonus.
Under the terms of agreement, the new buyers, Shell and Eni, who had earlier refused to deal with Malabu Oil, decided to pay $1.1 billion to the Federal Government for the acquisition of the OPL245 licence.
The fund, BH reliably gathered, will then be secretly released to Malabu Oil and its sponsors on the condition that they will withdraw all their cases in court against the government.
As agreed, after Shell and Eni paid 90 percent of the money into Nigeria’s account with JP Morgan branch in London, the FG immediately wired the sum of $500million into account of companies owned by one Aliyu Abubakar. Other funds, it was learnt, were also paid into offshore accounts supplied by Malabu.
The peace arrangement by President Jonathan’s government, however, collapsed, failing to resolve the ownership dispute, as the son of Gen. Sani Abacha, Mohammed, who is Malabu’s majority shareholder, alleged that the transaction was fraudulently done.
According to Mohammed, Etete, who represented Malabu and directly received most of the $1.1 billion paid, had no authority to do so. The matter dragged on until May 29, 2015 when former President Muhammadu Buhari defeated President Jonathan in the presidential election to become president.
Buhari immediately on assuming office, mandated the Economic and Financial Crimes Commission (EFCC) to probe the Malabu oil block transactions. According to the Buhari administration, majority of the $1.1 billion paid by Shell and Eni SpA into a Nigerian government account ended up in private pockets of individuals, including persons acting as fronts to President Jonathan and some officials serving in his government.
Working in collaboration with British and Italian agencies, which investigated the case, they were able to establish that the shadowy Aliyu Abubakar in whose account the $1.1billion Shell and Eni used to purchase Malabu Oil was actually a front for former President Jonathan, code named “Fortunato”.
The Buhari administration subsequently filled multiple cases of complicity and fraud against JP Morgan, Shell and Eni SpA, as well as Mohammed Adoke, former Attorney General and Minister of Justice in the administration of President Goodluck Jonathan, who brokered the deal and many other individuals in London, French and Italian courts.
Apart from getting a conviction against Etete for fraud in a French court, which sentenced him to prison for three years and fined him $10million, the Federal Government recorded few victories in court, losing most of the cases it instituted.
In spite of their victories in courts, Eni SpA and Shell, sources in the petroleum sector told our correspondent, have not been able to resume activities at two of the fields in OPL245 (known as Etan and Zabazaba) over government’s insistence that the license was fraudulently acquired by the oil giants.
Hope for a quick resolution of the lingering crisis now seems to be on the way with the coming into power of the new administration of President Bola Tinubu.
The president, sources disclosed, is favourable to ending all legal obstacles militating against the resumption of exploration activities at the oil and gas rich field.
According to the sources, the move to end all legal impediments is aimed at ramping up Nigeria’s oil production output to between 1.8 million to 2 million barrels of crude oil per day by the end of 2024.
“If you notice, government lawyers have been withdrawing civil cases they instituted against Shell and Eni in the courts of law.
“The general consensus in government is that Nigeria is the loser if the crisis is allowed to fester. Based on projected estimates prepared by energy and financial experts commissioned by the government, Nigeria loses at least $6billion annually from the shut-in oil field.
“This bleeding (loss of revenue) cannot be allowed to continue. I can tell you authoritatively that the president has ordered all parties in the dispute to come together to find amicable solutions to the problem.
“What have gained since all these years in court? Even any gain now is going to be a pyrrhic victory. The highest relief we asked for in court is $1.3billion. Add legal fees to its, maybe we’ll be getting between $1.8 billion to $2billion, which is not even guaranteed.
“Compare it with the almost $500m revenue, which we have been losing monthly since the licence was sold to Malabu over 23 years. That is in excess of $138billion ($6billion annually).
“The president should be praised for intervening in the matter. If things go according to plans, oil wells in the field are expected to add about 200,000 to 250,000 barrels a day to the nation’s crude oil export”, a dependable source in the Federal Ministry of Petroleum Resources confided in BH.
In compliance with the president’s directive, lawyers representing the Federal Government, in November 2023, withdrew a $1.1 billion civil suit against Eni in relations to the oil prospecting licence (OPL) 245 deal.
According to sources, Nigeria has waived its claims against Eni before Italy’s highest court.
The Federal Government will also waive the right to further legal action in Italy against Eni, its affiliates, current and past officers as it relates to the controversial OPL 245 deal.
Reports in the media say Eni confirmed receipt of the letter from the Federal Government, promising its readiness to work with Nigeria to ensure the development of the oil block.
A Shell source also confirmed that the Federal Government has terminated all civil proceedings against it and Eni SpA in relations to OPL 245, before Italy’s highest court.
“We are pleased that this claim has been withdrawn”, Shell noted in a statement made available to the media.
Likewise, the Federal Government has said that it would not be challenging the no-case submissions made by Mohammed Bello Adoke and five others in their alleged complicity in the Malabu Oil and Gas deal.
In its response to the no-case submissions dated December 2023, by counsel to the EFCC, Mr. Offem Uket, the prosecution claimed: “Having evaluated the evidence adduced by the ten prosecution witnesses including the exhibits tendered during the trial, the prosecution has no desire to arguing against the no case submission made by the 1st, 2nd, 4th, 5th, 6th and 7th defendants with regard to counts 1.2.3, 4 and 5.
“The decision is anchored on paucity of evidence available to sustain any of the ingredients required to establish each of the offences preferred against the six defendants”, Uket said.
Both Shell and ENI SpA, BH learnt, have pledged their willingness to partake in further development of the block if the new administration renewed the approval for oil prospecting in the field, which expired in 2021.
With the resolution of the over 25 years old dispute, Nigeria is expected to earn extra $468million monthly from the oil block estimated to hold over nine billion barrels of crude oil, nearly a quarter of the nation’s total proven crude reserves.
