Nigeria should revoke oil rights for which Royal Dutch Shell Plc and Eni SpA paid $1.1 billion, a parliamentary committee said, alleging that the acquisition process was â€œhighly flawed.â€ Shell and Eni jointly bought Oil Prospecting License 245 from Malabu Oil & Gas Ltd., controlled by Dan Etete, a former oil minister, in 2011. Located in the deep offshore waters of the Gulf of Guinea, it is estimated to hold at least 9 billion barrels of crude reserves worth $1 trillion…
By Elisha Bala-Gbogbo: July 19, 2013
Nigeria should revoke oil rights for which Royal Dutch Shell Plc (RDSA) and Eni SpA (ENI) paid $1.1 billion, a parliamentary committee said, alleging that the acquisition process was â€œhighly flawed.â€
Shell and Eni jointly bought Oil Prospecting License 245 from Malabu Oil & Gas Ltd., controlled by Dan Etete, a former oil minister, in 2011. Located in the deep offshore waters of the Gulf of Guinea, it is estimated to hold at least 9 billion barrels of crude reserves worth $1 trillion, according to a probe report by a House of Representatives committee filed as a public record and provided to Bloomberg yesterday.
â€œUnfortunately our national interest, knowingly or unknowingly, was ceded away to the two oil majors,â€ the committee said. The sale violates a law to promote increased Nigerian ownership of oil assets by giving foreign companies 100 percent ownership as well as the countryâ€™s tax regulations, the report said, alleging a â€œlack of transparency and full disclosureâ€ by Shell in acquiring the license.
Nigeria is Africaâ€™s largest oil producer, with Shell, Exxon Mobil Corp. (XOM:US), Chevron Corp. (CVX:US), Total SA (FP) and Eni running joint ventures with state-owned Nigerian National Petroleum Corp. that pump more than 90 percent of the countryâ€™s oil. The West African nation produced 1.83 million barrels a day of oil in June, according to data compiled by Bloomberg.
â€œShell companies have acted at all times in accordance with both Nigerian law and the terms of the OPL 245 resolution agreement,â€ Precious Okolobo, a Lagos-based spokesman, said yesterday in an e-mailed response to questions. Eni, based in Rome, didnâ€™t immediately respond to an e-mail requesting comment.
Malabu was awarded the rights to OPL 245 in 1998 by former military dictator Sani Abacha, whose son, Mohammed Abacha, got a 50 percent stake while 30 percent went to Etete, his oil minister. The company then formed a technical partnership with Shell.
President Olusegun Obasanjo, elected a year after Abacha died in 1998, canceled the license in 2001 without giving any reason and awarded it to Shell a year later. Malabu challenged the decision in court, saying the government revoked its license unfairly, leading to the agreement to sell its interests to Shell and Eni, now holding 50 percent each.
President Goodluck Jonathanâ€™s government resolved the dispute over the license in a â€œsatisfactory and holistic mannerâ€ after it considered a 2006 settlement reached by Malabu Oil and Shell, the governmentâ€™s indigenous policy and the fact that Shell has â€œsubstantially de-riskedâ€ the oil license, Justice Minister Mohammed Adoke said yesterday in an e-mailed response.
Calls to Malabu Oil on numbers listed for its Lagos office didnâ€™t go through.
â€œOur findings could not indicate anywhere Malabu Oil willingly inclined to relinquish the oil block,â€ the parliamentary report said. â€œWhere such inclination is presumed, they were rather forced on the company.â€
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