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Malabu oil deal: Award of OPL245 to Shell, ENI, flouted local laws, lawyer tells court in Italy



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THE contract award of Oil Prospecting License (OPL) 245 to Shell and ENI, did not follow Nigerian legal provisions, Dayo Ayoade, a Nigerian legal practitioner told a court in Milan, Italy on Wednesday.

Ayoade said this during his lead presentations to prosecutors in the ongoing case of the Malabu oil deal which had to do with the controversial and illegal selling of one of Nigeria’s most promising oil well, OPL 245, to two giant international oil companies (IOCs), Shell and ENI.

A staff of the Department of Law, University of Lagos, Ayoade was hired by Milan prosecutors to ascertain Shell and ENI corporate and legal obligations.

In his presentation in court on Wednesday, Ayoade told the court that “the award process for OPL245 to Shell and ENI did not follow the procedure established in the Petroleum Act, Petroleum (Drilling and Production) Regulation and DPR Guidance Notes for Prospective Bidders”.

“Failure to follow the relevant laws, policies and regulations is fatal to the legality of the OPL 245 award (Zebra Energy Ltd V FGN (2002),” he said.

“It is my considered view that the license award on the basis of an FGN Resolution Agreement is anomalous and unprecedented in the Nigerian Oil and Gas Sector.”

Under examination by the prosecutor, Fabio DePasquale, Ayoade further expressed shock at the condition for the acquisition of the lucrative bloc by the IOCs. In his oral testimony, he said he was “surprised that everything around the Resolution Agreements destabilises established petroleum laws and regulations in Nigeria”.

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“Contrary to the laws and standards, the Office of Attorney General of the Federation supervised the resolution processes and agreements on OPL245 deal as against the Ministry of Petroleum Resources,” Ayoade further told the court.

“The Minister of Petroleum Resources does have sufficient powers to award oil licences, but this must follow established procedure, and the Minister must perform his statutory duties in the public interest. The public interest is obviously missing in the OPL 245 award and subsequent Resolution Agreements.”

Recall that a court in Milan has already convicted and jailed the two facilitators of the deal, Emeka Obi and Gialuca DiNardo through accelerated hearing in September, last year.

The main presentation of experts’ report, examination and cross-examination of the experts resumed on Wednesday after an agreed break to enable the preparation and translation of reports into Italian by all the parties.

While the experts of the Nigerian Government are expected to make written and oral presentations on Thursday, April 4, the presentation by the ENI experts are expected by next week, April 10.

The issue of OPL245 started in started in 1998 during the military regime of Sani Abacha. There was a policy that was aimed at encouraging indigenous participation in the upstream sector of the oil and gas industry. Oil blocks were allocated to indigenous companies at a giveaway signature bonus of $20 million.

Malabu Oil Company, owned by Dan Etete, who was the Minister of Petroleum Resources at the time, was allocated OPL245 but the company paid only $2 million as part payment, and brought in Shell as its technical partner.

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The deal was later annulled in 1999 by then President Olusegun Obasanjo who subsequently assigned OPL245 to Shell. This led to a series of legal actions which lasted until 2006 when the parties – Malabu and Shell – decided to settle out of court. Eventually, OPL245 was returned to Malabu.

In 2017, however, the Economic and Financial Crimes Commission (EFCC) resurrected the issue and filed a case before the court asking that OPL245 should be returned to the federal government.

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