OML 49: Nigeria to pay firm $20 million damages

Adebayo Obajemu

A Federal High Court in Abuja has ruled in favour of Transnational Energy Limited in the dispute over Oil Mining License, OML, 49 oil field, and has ordered Nigeria to pay the firm $20 million damages.

According to the court judgment, Nigeria is expected to restore the Hely Creek and Abigborodo fields in OML 49, farmed-out to Transnational Energy Limited by the Chevron/NNPC Joint Venture, back to the company (Transnational Energy).

The farm-out, which was concluded in 2017 between Transnational Energy and the joint venture operators, Chevron Nigeria Limited, was, among others, for the purpose of providing feedstock to a gas-to-power project developed by Transnational Energy Limited and partners which started in 2012.

In a letter dated 20 February 2017, the Department of Petroleum Resources, DPR, had conveyed a letter of consent by the Minister of Petroleum Resources, approving the farm-out and its terms.

It equally directed the company to pay a prescribed premium to the Federal Government, after which the farm-out would become effective. Transnational Energy paid the prescribed fee, but, in a twist in January 2019, the late Chief of Staff to President Muhammadu Buhari, Abba Kyari, wrote a memo revoking the earlier ministerial consent, purportedly on the instruction of the president.

The DPR, without any notice to the farmee (Transnational Energy Limited), put the two fields in the 2020 marginal fields basket, though the fields were not part of the original 57 fields approved for the bid round.

The plaintiff (Transnational Energy Limited) and its sister company in the power business, Bresson A.S. Nigeria Limited, filed a suit FHC/ABJ/CS/1067/2020 in the Federal High Court, Abuja to challenge the actions of the respondents – the minister of petroleum resources, the minister of state for petroleum resources, the Department of Petroleum Resources, the National Petroleum Investment Management Services, NAPIMS, and the Attorney of the Federation and Minister of Justice.

The suit, which was filed by way of general originating summons by Transnational Energy Limited’s lawyer, Sijuwade Kayode, was backed by a 27 paragraphs affidavit and 16 exhibits.

Transnational Energy contended that the fields were legally farmed-out to it and that having paid the prescribed premium to the Federal Government, the farm-out was completed and that the later actions of Mr. Kyari was null and void.

The plaintiff asked for four reliefs amongst which is the award of US$20 million as liquidated damages against the defendants.