The OPL 245 settlement

Nigerians cannot but welcome the settlement. Aside the potential to unlock approximately 150,000 barrels per day crude production, surely, the president has done well to put closure to the saga hallmarked by the crass abuse of the public trust, the highpoint of which was the most egregious power play by actors without scruples.

Surely, the entire affair is everything about how not to manage a public trust; which is why Nigerians deserve a reminder at this time if only to ensure that they have a proper context for understanding how the country found itself in the mess in the first place.

In 1998, OPL 245 was awarded to Malabu Oil & Gas, a company linked to Dan Etete, the then petroleum minister, and his partner, Mohammed Abacha, the son of former head of State, Sani Abacha, for a $20 million signature bonus. For inexplicable reasons, it chose to pay only $2 million of that sum before entering into a joint operation agreement with Shell Nigeria Ultra Deep Limited (SNUD).

This was apparently before Malabu even obtained an operating licence! In fact, the operating licence which it later obtained in April 2001 under the Obasanjo administration would be revoked three months later, on July 2, 2001 by the administration, due to concerns over the improper award of the block by the previous military regime.

However, in what was supposed to correct the anomaly, the administration invited ExxonMobil and Shell, Malabu’s technical partner, to bid for the block in partnership with the Nigerian National Petroleum Corporation (NNPC). Shell won and thus began work on the block. Malabu, feeling betrayed, accused Shell of conniving with the government to seize the block and petitioned the House of Representatives. It also approached the Federal High Court in Abuja.

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However, while an appeal was pending, the Minister of State for Petroleum under the Obasanjo presidency, Edmund Daukoru, sought an out-of-court settlement on behalf of the Federal Government. That agreement, signed in 2006, saw Malabu reclaim the oil block from Shell, this time on condition that the company pay a new signature bonus of $210 million, in addition to the $2 million already paid in 1998.

As anyone might imagine, this in itself would create a fresh problem. Shell thereafter, opted to play the hard game. It filed for arbitration at the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C. It also instituted proceedings at the Federal High Court in Abuja – both with an eye on compensation and damages in excess of $2 billion, citing costs incurred in de-risking the block.

With no pathway to an amicable resolution in sight, the successor Goodluck Jonathan administration in April 2011 came up with a resolution agreement. The agreement, brokered by Mohammed Adoke, then Attorney-General of the Federation, required Malabu to waive all claims to OPL 245 in exchange for compensation from the Federal Government, and Shell to withdraw all suits against the government and to pay, through the Federal Government, the sum of $1.092 billion as full and final settlement of Malabu’s claims.

Thereafter, OPL 245 would revert to Shell and its new partner, Italian oil company Eni.

The matter had, by then, drawn international scrutiny with Italian prosecutors in particular alleging that most of the $1.3 billion purchase price actually went to politicians and middlemen. Among those named was one Abubakar Aliyu, who was alleged to be a front for senior government officials, including Adoke. Shell and Eni, along with several of their executives — including Eni CEO Claudio Descalzi — would then be hauled before the courts in Italy to face criminal trial. Adoke would on his part be arraigned before the FCT High Court in Abuja in February 2020 on a 40-count amended charge of bribery and related offences, alongside Aliyu, Rasky Gbinigie, Malabu Oil and Gas Limited.

With none of the charges established, the courts in Italy and Nigeria acquitted all of the accused.  Yet, the field remained frozen with no development taking place.

That was the situation until President Tinubu stepped in to break the ice. The implication of the latest settlement is that the various forces holding the block hostage have finally agreed to put their swords into their scabbards. In effect, the agreement clears the way for the development of one of Nigeria’s biggest deepwater reserves that has remained untapped for almost three decades amid overlapping lawsuits in multiple countries.

Surely, the administration deserves all the credit for the resolution. However, the saga itself, while it lasted, must be seen for what it truly is: the corruption of what should ordinarily have been a straight-forward process, a revelation of how the narrow corporate interests of a few can put the nation in a bind.

In this, the subtexts of corporate betrayals and the ensuing judicial muscle-flexing would be a mere derivative of the same structure of sublime corruption, particularly the disdain for fair business practices and the lack of straight-dealing  for which the nation’s oil sector in particular is renown.

Yet, notable as the acquittals of the principal actors by the courts are, the issues, quite frankly, are clearly beyond what the acquittals can ordinarily assuage. This is not just on account of the huge costs of having a 150,000 barrels oil block held down over the years, and with it the humongous cost of arbitration,  but the image of the country that has been sullied while the saga lasted.

The lessons are such that Nigerians should never forget, particularly now that the Petroleum Industry Act (PIA) has become operative. The main point is to ensure that the rules are scrupulously followed, going forward; and that the nation is not needlessly dragged into such corporate scandals, again.