Lindsay Barrett in Yenagoa
The recurrent emergence of controversial allegations over the operational status of the exploration rights associated with the Nigerian oil block OPL 245 has become a nightmare for the proprietors of the Nigerian-owned company known as Malabu Oil and Gas. The block was allocated to the company in 1998 when Gen. Sani Abacha was military head of state and Chief Dan Etete, a prominent politician from the Niger Delta, was oil minister in the cabinet. The allocation was granted under a policy that was meant to encourage local entrepreneurs to participate at the highest level in Nigeria’s lucrative petroleum industry. At the time that Malabu won the bid for the block, local speculators were granted a concessionary discount on the payment of the signature bonus and Malabu took full advantage of this. The company paid an advance of $2 million on the sum of $20 million, which government demanded, and fulfilled all other qualifying strictures laid down by the qualifying authorities. It also invited Royal Dutch Shell to act as its technical partner, a decision that gave added credibility to its ability to manage the allocation effectively. At the time, the list of the board members and proprietors of the company included names that showed that they came from communities all around Nigeria, especially including members of the so-called minority ethnic nationalities of the oil-bearing communities of the Niger Delta. Etete, who hails from Bayelsa State and is a member of the Ijaw ethnic nationality, was not then listed as an associate of the company.
The initial allocation of the oil block to the company was granted in 1998 in keeping with impeccable adherence to the new regulatory standards of the time. However, subsequent developments have led to challenges arising following Etete taking a direct interest in the affairs of Malabu after relinquishing his ministerial appointment. In 1999, when the new democratic order was in its infancy, the then President, retired General Olusegun Obasanjo, appeared to take a personal interest in the Malabu matter. It was public knowledge that Obasanjo was unhappy with many decisions taken during the Abacha regime’s tenure. He travelled to many foreign capitals prior to taking office vehemently denouncing the record of the Abacha administration, which had kept him in detention under questionable circumstances. It can hardly be denied that he had good reason to be unhappy with the Abacha government because of the treatment meted out to him, but what some neutral analysts question is whether his decision to annul the Malabu deal in 1999 was based on genuine concern for the legitimacy of the deal or whether it was based on his discovery that Etete had an interest in the matter.
After his government annulled the allocation of the oil block to Malabu in 1999 some observers noted that in that same year President Obasanjo’s government ordered the Nigerian military to sack Etete’s paternal hometown of Odi in Bayelsa State. Although it smacks of administrative paranoia to find any link between these events, it is Obasanjo’s own reported utterances on the matter at a later date that has provoked such suspicions. When the Federal Government ordered the nullification of the allocation of OPL 245, it immediately followed this by allocating the block to Shell without open bidding. Malabu protested this action, pointing out that Shell had been its partner and had enjoyed insider knowledge of the concession because it was invited by Malabu to participate in the operation of OPL 245. After negotiations that included appeals to the Nigerian National Assembly and legal challenges in Nigerian law courts Malabu won a review of the nullification and, in 2001, an out-of-court settlement between Malabu and the Federal Government was crafted. However, Shell protested against this settlement and continued to challenge the reversion of ownership to Malabu. This kept the matter in abeyance until 2006 when a decision was recorded by the minister of state for petroleum in Obasanjo’s government, which stated inter alia that “We are delighted to convey that the President of the Federal Republic of Nigeria and Commander-in-Chief of the armed forces, having concluded a review of your legal claims for the return of the oil block 245, has graciously approved and directed as follows: Malabu Oil and Gas Limited shall be at liberty to exercise all rights incidental to and consequent upon the return of the oil block to it and shall be free to assign, pledge or deal in any way with its restored right in OPL 245, in whole or in part to any third party subject as always to the operative laws of Nigeria including but not limited to obtaining all approvals permit and appropriate consents necessary.” Armed with this agreement Etete and his legal team confronted Shell over the purported reassignment of the oil block and so operation of the lucrative concession was further stymied by challenges.
This situation kept one of Nigeria’s and indeed Africa’s most remarkable oil finds inactive for nearly two decades until 2011 when the Nigerian government, by then led by Dr. Goodluck Ebele Jonathan, took the decision to return ownership of OPL 245 to Malabu. Shell had by then entered into partnership with Italian oil and gas company Eni to operate the block and the conglomerate paid the full international signature bonus of $210 million to the Nigerian Federal Government. The Shell-Eni partnership also paid the $1.1 billion assessed purchase value of the estimated 9 billion barrels capacity oil block to Malabu. With this payment fulfilled, and apparently sanctioned by all legitimate strictures, the lucrative oil block should have come on stream by now. Instead, incredibly, the matter is still being thrashed out in court cases and some almost inexplicable legal challenges in tribunals around the globe. The latest of these is an improbable Italian court case in which the Shell-Eni partnership is being accused of having been party to alleged bribery in the process of making its payment to Malabu. The genesis of this strange case has been attributed to statements allegedly made by Obasanjo, which were reported in 2012 when he is alleged to have said, “I can’t remember giving approval that the block be given back to Etete. We gave it back to Malabu. What Etete did was the height of corruption. He appropriated the asset to himself illegally, illegitimately, and immorally.” Statements like this from the ex-President have caused many observers to say that it is a personal grudge against Etete’s involvement that is driving the process of continued legal obstacles being put in the pathway of the effective exploitation of OPL 245.
The activities and consequences arising from the continued legal challenges in recent times have thrown doubt on the relevance as well as the positive objectives if any behind these challenges. Nigeria’s attorney-general Abubakar Malami recently expressed doubt that the continued court challenges over the issue will have any positive results for the Federal Government and several experts in the oil and gas sector have questioned the real purpose behind keeping one of Nigeria’s potentially most valuable assets idle. Supporters of Chief Etete believe that he is being singled out largely because he is a member of the Ijaw ethnic group, who are indigenes of major oil-bearing territories in the Niger Delta. In support of this contention they assert that several of his predecessors who hailed from the so-called majority ethnic nationalities have routinely joined major investment partners to control oil block concessions after they relinquished their appointments and that this practice has never been declared illegal before. As the saga continues, these arguments appear to be supported by some strange irregularities that have been surfacing in the courts. An example of this is the appearance in the Milan court at the most recent session of two lawyers claiming to represent the Nigerian government’s interest both of them requesting opposing reliefs. The issue caused uproar in the court and appeared to support the Nigerian attorney-general’s contention that the Malabu saga is becoming an embarrassment for the Federal Government rather than being a genuine attempt to settle a matter that is long overdue for settlement.