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ThisDayOnline: Malabu Files Objection to Shell’s Suit

By Chika Amanze-Nwachuku, 06.30.2007

Malabu Oil and Gas, a company owned by former Minister of Petroleum Resources, Chief Dan Etete yesterday disclosed that it had filed a preliminary objection to a suit brought by Royal Dutch Shell against the Oil Prospecting Licence (OPL245) re-allocated to it by the Federal Government. It said it would resist moves by Shell to “continue to act as clog in its (Malabu) efforts to develop and realise the full potential of the oil block.’’

Shell had gone before an Abuja Federal High Court  to challenge the decision of the Federal Government to re-allocate the oil block to Malabu.

Addressing newsmen in Lagos, Mr. Rasky Gbenigie, Company Secretary/Legal Adviser to Malabu insisted that the oil block licence, which was obtained in 1998, but was revoked in 2001, was restored to his company following an out-of court settlement after a protracted legal battle between Malabu and government.

He argued that Shell could not have been a party to the settlement agreement because the issue of ownership was the bone of contention between Malabu and the Federal Government, adding that it was in pursuance of the terms and conditions of the grant of the OPL 245 to Malabu that it (Malabu) sought the technical partnership of Shell to which the indigenous company also farmed out 40 per cent participating interest to Shell as its technical partner.

He argued that there was no basis for Malabu to invite Shell to be a party to the settlement agreement, when it terminated the partnership agreement, which it entered into with Malabu.

The counsel stated that the suit filed by Shell was intended to preserve its (Shell) rights as a contractor under the Production Sharing Contract (PSC) between it and the Nigerian National Petroleum Corporation (NNPC), insisting that Shell was merely a contractor to NNPC.

Continuing, he said, the PSC between Shell and NNPC anticipated the resolution of the dispute and consequently was predicated upon an escrow agreement executed between NNPC, Shell and federal government which made provisions for the return/refund of the sum of $209 million paid as signature bonus by Shell in the event that the litigation between Malabu and Government is resolved in favour of the later (Malabu).

“Therefore, Shell at all material times anticipated the resolution of the dispute between the Federal Government and Malabu Oil and Gas and every document they executed particularly the PSC was made subject to that resolution. Whether Shell can in the face of this undisputed fact contest the settlement agreement is left to be seen.”

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