Nigeria reportedly withdraws claim of $1bn oil deal against Eni

THE Nigerian government has reportedly withdrawn the civil claims totaling $1.1 billion against an Italian oil firm, Eni SpA (ENI), to end years of corruption allegations over Oil Prospecting License 245 (OPL 245).

The oil field deal started in 1998 and has seen the Nigerian government in a long battle with the oil firm in Italian courts.

According to a report by Bloomberg on Thursday, November 16, a letter from Eni confirms Nigeria’s withdrawal from the case, although international arbitration and litigation within Nigeria continues.

It stated that Nigeria’s justice ministry would waive the claims before Italy’s highest court “unconditionally” and “with immediate effect” no later than November 17.

The government will also “irrevocably” waive the right to any further legal action in Italy against Eni, its affiliates, and current and past officers regarding rights for the field.

The report quoted Eni as confirming in a statement that it was ready to consider, together with the government of Nigeria, the necessary steps for conversion of the prospective license to one that would allow the development of the oil block.

Efforts by The ICIR to get the presidency’s reaction were unsuccessful as President Bola Tinubu’s spokesman, Ajuri Ngelale, has yet to respond to calls and WhatsApp messages sent to him on the development.

This organisation reports that operations at the oil block have been halted for more than a decade by a series of litigations.

OPL 245, an area located in the southern Niger Delta, is considered to be potentially one of the wealthiest concessions in Nigeria, with recoverable reserves of 560 million barrels, according to Eni’s estimates.

“Whether Eni and its partner Shell Plc (SHEL) could finally begin to develop OPL 245 may depend on the resolution of other claims, including arbitration proceedings filed by Eni at the World Bank’s International Centre for Settlement of Investment Disputes and litigation within the country,” Bloomberg stated.

It added that Eni, Shell, and some of their former and current managers had already been “definitively acquitted” last year in a criminal case in Milan, in which they were accused of knowing that much of the $1.1 billion they paid to acquire OPL 245 would be distributed as bribes.

Nigeria sought combined compensation of $3.5 billion from Eni and Shell, claiming the amount reflected the actual license value purchased in 2011 by the two companies.

OPL 245 fails legal provisions

The ICIR had, on April 3, 2019, reported that the contract award of OPL 245 to Shell and Eni did not follow Nigerian legal provisions.

Dayo Ayoade, a Nigerian legal practitioner, told a court in Milan, Italy, that the award process for OPL 245 to Shell and ENI needed to 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).

“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,” he argued.

The ICIR, on September 20, 2018, also reported that a court in Milan convicted and jailed two facilitators of the deal, Emeka Obi and Gianluca DiNardo, through an accelerated hearing in September 2017.

Background issues surrounding OPL 245

The issue of OPL 245 started in 1998 during the military regime of Sani Abacha, following a policy that encouraged indigenous participation in the upstream sector of the oil and gas industry.

By then, oil blocks were allocated to indigenous companies at a giveaway signature bonus of $20 million.

It followed that Malabu Oil Company, owned by Dan Etete, Minister of Petroleum Resources at the time, was allocated OPL 245. Still, the company paid only $2 million as part payment and brought in Shell as its technical partner.

The deal was later annulled in 1999 by former President Olusegun Obasanjo, who subsequently assigned OPL 245 to Shell. This led to a series of legal actions, which lasted until 2006 when Malabu and Shell decided to settle out of court. Eventually, OPL 245 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 OPL 245 be returned to the federal government.

Eni divests investment in Nigeria

The Italian firm Eni had recently, in a statement signed by the company secretary, Ayotola Jagun, on Monday, September 4, revealed plans to divest its onshore Nigerian assets to Oando Plc, an indigenous energy solutions provider.

The ICIR reported that Oando did not disclose the acquisition cost, but an investment bank, Jefferies, pegged the deal at more than $500 million.

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