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BBC Monitoring Service: Nigeria leader summons petroleum regulatory body over disputed oil block

Published: Jul 25, 2007

Text of report by Nigerian newspaper The Guardian website on 23 July 2007

SIX years after its revocation, the choice oil block that was awarded to a firm owned by the then Petroleum Minister, Chief Dan Etete, is still mired in controversy.

But President Umaru Musa Yar’Adua will from this morning begin the process of sorting out the maze.

Granted to Etete Malabu Oil and Gas Limited in April 1998, Oil Prospecting License (OPL) 245 was in 2001 revoked by former President Olusegun Obasanjo, who awarded it to Shell Nigeria Ultra Deep Limited (SNUD), after a competitive bidding.

But five months to the end of its tenure, the Obasanjo administration re-awarded the block to Malabu following an out-of-court settlement.

The decision has stirred a protest from Shell which claims to have committed huge sums into works on this block apart from $210 million it paid as signature bonus.

President Yar’Adua has summoned the management of the Nigerian National Petroleum Corporation (NNPC) to a meeting today over the oil block.

The Guardian learnt that the corporation is expected to make presentations on the controversy surrounding the award, revocation and return of the oil block to the former minister.

It was gathered that the former President also directed NNPC to take up equity share in the venture.

According to a source, NNPC is expected to take over at least 50 per cent of the equity while the balance goes to Shell and Malabo on agreeable equity ownership participation as was done in the case of OPL 246.

Malabo says that the block was returned to it via a letter dated March 16, 2007 written by the former Minister of Justice, Mr Bayo Ojo and addressed to the former Minister of Energy, Dr Edmund Daukoru.

The source also cited letters written by Daukoru dated February 27, 2007and April 11, 2007 to Chief Dan Etete and Managing Director of Shell, confirming the return of the oil block to Malabo by the Obasanjo administration.

But Shell, in a reaction to this development, refuted the charge that it instigated government’s revocation of OPL 245 from Malabo.

The firm claimed that it was, in fact, after the revocation in 2001, and a competitive Production Sharing Contract (PSC) bid round in 2002, that it won the block.

The firm in a statement pointed out that it participated in the exercise and thereafter became PSC contractor to NNPC.

“Malabo is aware that government has notified that it would work to an amicable resolution to the satisfaction of all parties concerned”, Shell stated.

Shell had paid $210 million signature bonus on the block and signed a PSC.

It was not clear as at press time whether Shell was a party to the block-out-of-court settlement with the Federal Government. But Malabo said the terms of settlement include:

That OPL 245 will be completely returned to Malabo Oil and Gas Limited; and

that the Federal Government has informed Shell of this development and has offered alternative oil acreage.

Malabo Oil and Gas Limited is expected to pay the Federal Government a signature bonus of $210 million within 90 days.

Source: The Guardian website, Lagos, in English 23 Jul 07

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