Six things to know about the Malabu oil deal

On Wednesday, the house of representatives asked ex-President Goodluck Jonathan to testify in its investigation of the award of oil prospecting licence (OPL) 245 to Malabu Oil and Gas.

OPL 245 is an oilfield in the Niger Delta. It has about nine billion barrels of crude oil, estimated to worth half a trillion dollars. The sale of the block, which is considered as one of the most lucrative on the continent, has been replete with allegations and lawsuits.

Below are six things to know about what can be argued as Nigeria’s most controversial deal.

ORIGINATED IN 1998 BUT CONSUMMATED IN 2011

The Malabu oil transaction started in 1998 when the military administration of Sani Abacha came up with the policy of encouraging indigenous participation in the upstream sector of the oil and gas industry.

Oil blocks were allocated to indigenous companies at a reduced signature bonus of $20 million.

Signature bonus is a one-time fee for the assignment and securing of a license, paid irrespective of economic success for the contractor or licensee.

Malabu was allocated OPL 245 and they made a part-payment of $2 million for the signature bonus and brought in Shell as technical partners, but the deal was consummated in 2011 when Jonathan was in power.

THE KEY PLAYERS

Some of the key persons involved in the deal are Jonathan, Abacha, who was head of state from 1993 to 1998; Dan Etete, his minister of petroleum resources; Mohammed Abacha, son of the former head of state; Hassan Hindu, wife of Hassan Adamu, the Wakili Adamawa and one time Nigeria’s ambassador to the United States, Olusegun Obasanjo, Shell, Eni, Mohammed Adoke, minister of justice under Jonathan, and the Corporate Affairs Commission (CAC).

SALE TO MALABU NULLIFIED

The sale of OPL 245 to Malabu was nullified by Obasanjo in 1999 and assigned to Shell — without a public bid. Ownership was later reverted to Malabu thereafter, leading to legal action by Shell. The company later resorted to negotiating directly with Etete after Jonathan assumed office in 2010.

GOVERNMENT REVOKED OPL 245 IN 2001

In 2001, the federal government revoked OPL 245 from Malabu, whose beneficial owner was Etete. As minister of petroleum, the oil block was awarded to Malabu in 1998. The administration of Obasanjo then invited some international oil companies (IOCs) to bid for the block. Shell participated and won the bid.

The signature bonus was $210 million. Malabu felt short-changed that Shell, its technical partner, had acted irresponsibly. Shell as technical partner to Malabu already had inside knowledge of the block.

Malabu petitioned the house of representatives which then conducted a public hearing into the transaction and concluded that the revocation of the block from Malabu and reallocation to Shell was done mala fide (in bad faith) and declared it null and void. It, therefore, passed a resolution that the block should be returned to Malabu.

OPL 245 RETURNED TO MALABU IN 2006

Government did not comply with the resolution of the green chamber, so Malabu went to court and there was a series of litigation between Malabu and the government until sometime in 2006 when they entered into an out-of-court settlement which was subsequently reduced to a consent judgment of the federal high court, Abuja.

As a result of the agreement and all the conditions set out to be met by all parties, Edmund Daukoru, who was then the minister of state for petroleum resources, wrote on behalf of the federal government, and on behalf of Obasanjo to convey the decision to return the block 100% to Malabu in accordance with the terms of settlement.

EFCC RESURRECTED THE CASE IN 2017

The Economic and Financial Crimes Commission (EFCC) brought back Malabu case in 2017, seeking a court order to return OPL 245 to the federal government — an order which was granted by the federal high court, Abuja in January.

But Shell and Eni challenged the ruling and contended that the rights of parties to fair hearing was not followed before the ruling was reached. They prayed the court to reverse the order, and allow the parties address the issue legally. John Tosho, a judge, held that the ownership of the block should return to Shell and Eni.