Tag: Malabu

Investigation into the Malabu Oil  deal is too complex, making it difficult to unravel the matter, Attorney-General of the Federation and Minister of Justice, Abubakar Malami said yesterday.

Malami spoke at the resumed hearing of the House of Representatives ad hoc committee on the investigation of alleged corruption, malpractices and breach of due process in the award of an oil block, OPL 245.

According to Malami, multiple requests had been made internationally and locally without success.

He spoke of the Mutual Legal Assistance request to the United States, Italy and the United Kingdom.

He said even within Malabu Oil itself, there were divided and contending interests, making it difficult to ascertain which of the interests signed what agreement.

He said: “We have multiple contentions. There is Mohammed Abacha. We have Dan Etete, Atiku Abubakar, Hassan Adamu; they are all laying claims to entities.”

Though he presented a 16-page off-the-grid documents which he did not submit to the committee, the AGF said in the light of the constraints concerning the case, he had limited information because “investigation is ongoing” and “no conclusion is certain.”

“The field has not been covered. Investigation is ongoing nationally and internationally and what I say might alter the conclusion of the case,” Malami said.

He said he needed time to prepare a proper and fuller brief for the committee because “criminal investigations are still ongoing.

Malami added: “I took steps to write to the international agencies and government to consolidate on the available information. Only day before yesterday ( Tuesday),  I forwarded response to the Mutual Legal request that has to do with Malabu in the U.S. We have to move with caution by allowing representations to be made.”

Abacha and Chief Oyewole Fasawe, who are shareholders in Malabu, were at the hearing but withdrew their submissions so as to present a more comprehensive and detailed presentation.

Abdullahi Haruna, Malabu’s lawyer who spoke for Abacha and Fasawe, said they had submitted documents to the 7th House on the same issue and wanted to know if they needed to start afresh.

Committee Chair Razak Atunwa  said though the event was not a substantive hearing, it was nonetheless important, adding that the 8th House is starting the probe afresh.

“This is a highly controversial allocation of perhaps the biggest oil bloc in Africa

There is a lot at stake on this issue and the credibility and revenue for this country is at stake.

“However complex the situation may be, the law is able to deal with it. The House is also able to make enquiries and make recommendation on the matter.”

He said part of the purpose is to identify culpability of persons and organisations in relation to award of OPL 245 and to consider the actions to be taken locally and internationally.

Razak said the committee is also to unveil the “processes that led to the award of the OPL 245.”

He added: “The powers of the former minister to award the oil block in not unfettered. The House has the power to examine.”

The next hearing will hold on October 18.

Royal Dutch Shell yesterday said Dutch investigators visited its headquarters in the Hague over an investigation into a the controversial Nigerian offshore oil field located in oil prospecting licence (OPL) 245 retrieved from Malabu Oil over allegations of fraud in award of the oil block, and later sold to Shell and Eni.

A Shell spokesman in Nigeria, Precious Okolobo,  confirmed that the firm’s headquarters was visited by investigators. He said: “We can confirm that representatives of the Dutch Financial Intelligence and Investigation Service (FIOD) and the Dutch Public Prosecutor recently visited Shell at its headquarters in The Hague. The visit was related to OPL 245, an offshore block in Nigeria that was the subject of a series of long-standing disputes with the Federal Government of Nigeria. Shell is cooperating with the authorities and is looking into the allegations, which it takes seriously.

“Shell attaches the greatest importance to business integrity. It’s one of our core values and is a central tenet of the business principles that govern the way we do business. All employees are expected to uphold these principles and failure to do so will result in consequences up to and including dismissal.”

 Also, Italian prosecutors are reportedly investigating Royal Dutch Shell over allegations of international corruption in relation to a big Nigeria oil deal that also involved Italian oil giant, Eni.

Milan prosecutors opened a corruption probe into Eni in 2014 in a case relating to a $1.3 billion acquisition of Nigeria’s OPL-245 offshore oil block in 2011 by the Italian company and Shell.

They later placed under investigation Eni’s Chief Executive Claudio Descalzi and another top manager at the company. The probe has now been widened to Shell, the source said, confirming a report in an Italian daily, Corriere della Sera.

“We can confirm we have received notice of proceedings from the Public Prosecutor in Italy,” a Shell spokesman said.

The controversial oil block said to hold about nine billion barrels of oil was alleged to have been fraudulently sold to Malabu Oil for a paltry sum by Dan Etete who was the Minister of Petroleum between March 1995 and 1998.

Malabu Oil is alleged to belong to Etete and the late military Head of State, General Sani Abacha. The oil block was awarded Malabu two weeks before Abacha died. Until today, it was said that lawyers representing Malabu in the forfeiture of $83 million oil deal in British Courts were representing Etete, though he refuted and claimed to be a consultant to Malabu.

In 2001, former President Olusegun Obasanjo cancelled the Malabu licence on the basis that the allocation was inappropriate, and the ownership reverted to the Federal Government.

In 2011, the Federal Government under former President Goodluck Jonathan sold the oil block to Shell and Eni for $1.1billion and another $207million as signature bonus. Reportedly, few days after about 90 per cent of the payment was made to Nigeria’s JP Morgan London account, the Federal Government transferred the payment to Malabu’s account and thereafter over $500million was wired to companies owned by a certain Aliyu Abubakar.

The Italian prosecutor at the British Court reportedly claimed they have a wire tap that confirmed Abubakar was a front for former President Jonathan, code named “Fortunato”.

The office of the Director of Public Prosecution (DPP) headed by Mohammed Diri, had a committee, which included lawyers from his office that looked into the case. The committee called for the cancellation of the “settlement agreement” that ceded the oil block to Shell and Eni.

The Attorney-General of the Federation and Minister of Justice, Abubakar Malami, will advise the Federal Government on the committee’s recommendations and should President Muhammadu Buhari approve the recommendations, Shell and Eni will lose the oil block.

The Economic and Financial Crimes Commission (EFCC) will begin full investigation into the $2 billion Malabu Oil Block in a matter of weeks. Already, some of those behind the deal have been running from pillar to post over the probe. MANAGING EDITOR YUSUF ALLI explores the facts and writes on the intrigues surrounding the ‘mysterious’ transaction.

Lingering litigations on Malabu OPL 245

The revocation of Malabu’s licence on July 2, 2001, triggered a string of litigations on OPL 245. The shoddy handling of the aftermath by the Obasanjo administration accounted for the recurring disputes on the oil block.

At a point in 2006, the Obasanjo administration restored the OPL 245 to Malabu Oil and Gas. In an executive summary, a former Attorney-General of the Federation and Minister of Justice, Mr. Mohammed Bello Adoke, said: “Exxon-Mobil and Shell were then invited in April 2002 to bid for the same OPL 245 as contractors on a Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC) despite the existence of subsisting contractual agreements between Malabu and SNUD with respect to OPL 245.

“Dissatisfied with the revocation, Malabu contended, among other things, that the circumstances leading to the revocation of its licence on Block 245 was not transparent and smacked of inducement and connivance from SNUD, which at the material time was its technical partner. It was also contended by Malabu that the subsequent re-award of OPL 245 to SNUD by the FGN was done under questionable circumstances.

“Malabu then petitioned the House of Representatives Committee on Petroleum to look into the matter. It is important to note that the House of Representatives Committee on Petroleum found no rational basis for the revocation and reprimanded Shell for its complicity.

“The committee also directed the Federal Government to withdraw the reaward it made to Shell and return OPL 245 to Malabu, the original allottee of the block. In addition to its recourse to the House of Representatives Committee on Petroleum, Malabu also instituted a suit before the Federal High Court in Abuja to enforce its claim to OPL 245.

The details of Malabu’s claims before the Federal High Court were as follows:

• A declaration that the grant to the plaintiff of OPL 245 by the 1st to 6th Defendants evidenced by the Oil Prospecting licence No. 245 dated 15th May, 2001 effective from 29th April, 1998 signed on behalf of the minister of Petroleum Resources is valid and subsisting;
• A declaration that the withdrawal by 1st to 6th defendants of OPL 245 and the subsequent revocation of the title deed (Oil Prospecting Licence 245 dated May 15, 2001) issued to the plaintiff, without any notice or reason and when the plaintiff has fulfilled all statutory and contractual terms in arbitrary, capricious, contrary to the rules of natural justice, illegal and null and void;
• A declaration that the award of OPL 245 to Shell Nigeria Ultra Deep Limited, the 7th Defendant by the 1st to the 9th Defendants, illegal, null and void.
• An order setting aside the award of OPL 245 by the 1st to 6th defendants to Shell Nigeria Ultra Deep Limited, the 7th defendant;
• An injunction restraining the defendants by themselves, their servants, agents or privies from interfering with the plaintiff’s rights or interests in OPL 245 by allocating same to Shell Nigeria Ultra Deep Limited, the 7th defendants or however.

 “The plaintiff also claimed against the defendants, jointly and severally, general damages in the sum of $100 million.

“Although, the suit was struck out by the FHC, Malabu proceeded to lodge Appeal No. CA/A/99M/2006, before the Court of Appeal, Abuja, Division in 2006. During the pendency of the appeal, an amicable settlement was entered into between Malabu and the FGN and in compliance with the terms of settlement executed by the Parties on 30th November 2006; OPL 245 was fully and completely restored to Malabu in consideration for its withdrawal of the Appeal.”

“It is instructive to note that the Minister of State, Dr. Edmund Daukoru, communicated the restoration of the OPL 245, to Malabu vide a letter dated 2nd December, 2006.

“The Minister of State’s letter also clearly stated that President Obasanjo had duly approved the restoration of OPL 245 to Malabu. It is important to state that the terms of settlement were filed in court as consent judgment and become binding orders of the court. The major clauses in the terms of settlement are reproduced below to show the issues, agreed upon by the parties.

• In the spirit of an amicable settlement and without any admission of liability for any alleged wrongful, unlawful, unjust or any like conduct, the Federal Government agrees to re-allocate the oil block known as and covered by Oil Prospecting Licence 245 to Malabu Oil and gas Limited (herein referred to as ‘Malabu’) within 30 days from the date of this agreement;
• The signature bonus in respect of OPL 245 shall be the sum of $210 million payable by Malabu to the the Federal Government. In this regard, the government acknowledges that Malabu had hitherto paid the sum of $2,040,000 to the FGN in respect of this oil block which sum shall be deducted from the aforesaid signature bonus leaving a balance of $207,960,000 to be paid by Malabu to the FGN within 12 months from the date of the re-instatement of OPL 245 to Malabu;
• The parties agree that Malabu shall, if it so desires, be at liberty to assign OPL 245 or any part thereof in accordance with the provisions of the Petroleum Act;
• Pursuant to this agreement and in consideration of the foregoing, Malabu hereby forever and absolutely discharges and releases the FGN, its officers, agents, agencies and privies howsoever described or any person acting for and/or on its behalf, from all claims or demands which Malabu has or may have and from all actions, proceedings, obligations, liabilities, losses and damages brought, made, incurred, sustained or suffered by Malabu now or in the future relating to, arising from or however connected with the withdrawal or revocation by the FGN from Malabu of OPL 245.
• The parties agree that these terms of settlement shall be made the judgment of the court.

“A cursory reading of the above clauses in the terms of settlement would reveal that it was the agreement of the Parties that OPL 245 should be fully restored to Malabu; Malabu was executed to pay the balance of the signature bonus in the sum of $207,960,000 and Malabu was free to dispose of the block by way of assignment.

“Malabu, accordingly, released the FGN from liability on account of the actions taken in respect of OPL 245. It is apposite to note that no other individual or corporate body was a party to the court action by Malabu or the amicable settlement with the FGN.”

 How OPL 245 assumed

international dimension    

Unimpressed by the 2006 Terms of Settlement on OPL 245, SNUD filed a complaint against the Federal Government at the International Centre for the Settlement of Investment Disputes (ICSID) in Washington DC. It made representations to the government on the impending arbitration. It also commenced a suit against the government before the Federal High Court, Abuja.

As far as SNUD was concerned, it remained the owner of OPL 245, having had a PSC with the NNPC since 2003 SNUD had paid $1 million out of the $210 million signature bonus to the Federal Government and kept the balance of $209 million in an Escrow Account with J.P. Morgan, pending the resolution of the dispute between Malabu and the Federal Government.

A document made available to The Nation said: “SNUD therefore claimed compensation and damages from the FGN for the revocation of the OPL 245 and its subsequent reallocation to Malabu in excess of $2 billion and relied on the expenditure its incurred under the PSC with the NNPC.

Efforts to settle the

lingering dispute by

successive administrations

In a letter to the EFCC, Adoke gave insights into past efforts to resolve the dispute on Malabu’s OPL 245.

He said: “It is apparent from the exchange of letters between the Presidency, Ministry of Petroleum Resources, SNUD and Malabu, that several meetings were held between President Obasanjo and SNUD to resolve the dispute.

The former President had proposed a middle course solution to the dispute; whereby, the interests of SNUD, Malabu and NNPC would be accommodated on OPL 245, i.e SNUD would be the contractor-operator, while NNPC and Malabu would be concessionaire equity right and concessionaire equity interests respectively.

“While it would appear that SNUD was comfortable with the above arrangement, Malabu contended that the solution failed to take cognizance of its ownership rights over OPL 245. Malabu asserted that the proposed solution amounted to be a unilateral imposition of the back-in regime, which did not apply in the circumstance.

“In general, Malabu was of the view that SNUD was not in a position to insist that it must be the contractor on OPL 245 and canvassed the full implementation of the terms of settlement that were already reduced to orders of the court.

“To reconcile these conflicting positions, the Minister of State, Petroleum Resources had by a letter dated 11th May, 2007 to President Obasanjo, proposed that a committed, made up of himself, the Attorney-General of the Federation, Minister of Energy, GMD of NNPC, DPR with external solicitors serving as resource persons, be constituted to enter into settlement negotiations with the affected companies.

“However, there is no indication on the records that the committee was able to arrive at any satisfactory outcome before President Umaru Musa Yar’Adua was sworn in as President on 29th May, 2007.

“Records also show that between 2007 and 2010 when the administration of President Umaru Musa Yar’Adua was in power, no satisfactory outcome was achieved in the lingering dispute as the arbitral proceedings initiated by SNUD before ICSID were still progressing. This remained the position until the demise of President Umaru Musa Yar’Adua GCRF in 2010.

 “When President Goodluck Jonathan came to power, Malabu again petitioned the Federal Government to implement the terms of the out-of-court settlement of November 30, 2006 on the basis of which they had discontinued their appeal.

“The FGN, in considering Malabu’s request, took cognizance of the pending cases instituted by SNUD against FGN and/or Malabu, including Bilateral Investment Treaty (BIT) arbitration No. ARB/07/18 pending at ICSID to enforce SNUD’s rights to exclusively operate Block 245 as contractor on the basis of the 2003 PSC between NNPC and SNUD and the financial implications of defending theses actions on the public purse and opted for amicable resolution of the dispute.

“To resolve all the contending claims in satisfactory and holistic manner, due regard was given to the Terms of Settlement of November 30, 2006 which had been reduced to orders of the court; the underlying policy of encouraging the participation of indigenous oil and gas companies in the upstream sector of the oil industry and the fact that Shell, had substantially de-risked Block 245.

“To accommodate all these interests, a resolution agreement dated  April 19, 2011 between the Federal Government and Malabu Oil and Gas Limited was executed wherein the FGN agreed to resolve all the issues with Malabu in respect of Block 245 amicably and Malabu also agreed that in consideration of receiving compensation from the FGN, it would settle and waive any and all claims to any interest in OPL 245.

“The FGN and SNUD also agreed to withdraw and wholly discontinue all pending suits/arbitration in respect off Block 245.

“In furtherance of the resolution agreement, SNUD and ENI agreed to pay Malabu through the Federal Government acting as an obligor, the sum of $1,092,040,000 billion in full and final settlement of any and all claims, interests or rights relating to or in connection with Block 245, and Malabu agreed to settle and waive any and all claims, interests or rights relating to or in connection with Block 245 and also consented to the re-allocation of Block 245 to Nigerian Agip Exploration Limited (NAE) and Shell Nigeria Exploration and Production Company Limited (SNEPCO).

“It is therefore quite evident from the foregoing that the role played by the Federal government, its agencies and officials in relation to Block 245 was essentially that of a facilitator of the resolution of a long standing dispute between Malabu and SNUD over the ownership and right to operate Block 245.

“At all times material to the resolution of the dispute, the Federal Government was not aware of any subsisting third party interest in Malabu’s claim to OPL 245 and neither did any person or company apply to be joined in the negotiations as an interested party until the resolution of the dispute was concluded.”

Emergence of fresh

claims against Malabu

“At a point when the nation was getting reprieve on Malabu Oil deal, contending claims cropped up against the company. The claims were from Abachas owned Pecos Energy Limited; Energy Venture Partners Limited (a British Virgin Island Company); and International Legal Consulting Limited (a Russian Company).

“It would be recalled that after the negotiations were concluded and relevant agreements executed, the FGN instructed J.P. Morgan Chase to pay Malabu the sum of $ 1,092,040,000 billion due to the company under the Block 245 resolution agreement. It was at this stage that the FGN became aware of the claims of:

• Energy Venture Partners Limited (a British Virgin Island Company, which sued Malabu for the sum of $200 million together with damages and cost of $15 million;
• International Legal Consulting Limited (a Russian Company), which commenced an Arbitration proceedings against Malabu at the London Court of International Arbitration suing for $75 million.

“There were letters dated 22nd July, 2011 from Edwards Angel Palmer & Dodge and the letter dated 3rd June, 2013 from Malabu in relation to the aforementioned claims.

“The Escrow Agent – J.P Morgan Chase – had pursuant to aforementioned claims paid the sum of $215 million into the High Court of Justice, England and also retained $75 million to await the outcome of the litigation. The balance of $801.5 million was then paid to Malabu’s bankers in Nigeria.

“When the FGN was informed that the litigation/arbitration were in favour of Malabu and that the court had lifted the freezing orders, the minister of Finance was accordingly advised by the office of the Attorney-General of the Federation to instruct the escrow agent to release the $75 million that was retained on account of the freezing order to Malabu in fulfilment of government’s obligations under the resolution agreement.

The consent order of the High Court of Justice Queens Bench Division, Commercial Court dated 7th May, 2013 on the strength of which the ministry of Finance was advised to instruct the escrow agent to pay Malabu the sum of $75 million retained pursuant to a freezing order.

“In addition to the above claim, the Federal Government also became aware of the claim of Pecos Energy Limited and Mohammed Sani (aka Mohammed Sani Abacha) vide a letter dated 20th January 2010 from A.A Umar & Co., the solicitor retained by them. “They asserted through their solicitors that they had bought OPL 245 from Dan Etete for $1.3 billion and that Dan Etete had, without their knowledge, disposed of their interests in OPL 245 to SNUD, NAE and SNEPCO.

The letter from A.A Umar & Co is enclosed as Annexure K. The letter under reference also called on the Attorney General of the federation as the Chief Law Officer of the Country to call a meeting of all disputing parties in order to settle the matter.

“It is instructive to note that the office of the Attorney-General had at all, times material to the resolution of the dispute maintained the position that it was only implementing the terms of settlement dated 30th November, 2006 between Malabu and the government over the ownership/right to operate OPL 245 and that records show that only Malabu was a party to the suits/arbitral proceedings instituted by the contending parties.

“Consequently, the position of the office of the Attorney-General was to refuse to be dragged into new issues/claims that were not covered by the terms of settlement of November 30, 2003 as it did not have the competence to resolve such issues.

“Accordingly, all such claims for competing interests in Malabu were referred to the company for resolution as an internal matter of the company. The Abacha family and associated companies were apparently dissatisfied with his position and petitioned the House of Representatives.”

Why the latest probe by

EFCC is necessary

Expectedly, the latest probe of the $2 billion Malabu Oil deal by the EFCC will ascertain whether or not the country was short-changed by Malabu Oil and Gas Limited, SNUD and other foreign firms connected with the controversial OPL 245 Block.

The EFCC investigation coincided with the ruling of a London Court Judge, Justice Edis of the Southwark Crown Court, London, on December 14, 2015, stopping the payment of N17 billion to Malabu Oil and Company. The judge said he was “not sure that the administration of former President Jonathan acted in the interest of Nigeria by approving the transfer of the money to Malabu.

He said: “I cannot simply assume that the Federal Government which was in power in 2011 and subsequently until 2015 rigorously defended the public interest of the people of Nigeria in all respects.”

The judge’s ruling lent credence to suspicion that many public officers clandestinely feasted on the lingering crisis to enrich themselves, even no slush funds had been traced to any past public officer.

But the onus is on the EFCC to look at all issues including terms of settlement, mode of payment to Malabu Oil and Gas Limited, the fresh claims by some parties such as the Abachas, and the role of Etete in the deal.

The EFCC will determine whether or not Etete merely managed a portfolio or a real company to make money from a nation which gave him opportunity to serve as its oil minister.

In 2007, a French court sentenced Etete in absentia to three years in prison and a fine of 300,000 Euros (about $440,000) for money laundering.

Etete was “convicted of using 15 million Euros in funds obtained fraudulently to purchase properties in 1999 and 2000 including a chateau in northwest France, a Paris apartment and a luxury villa in the chic Paris suburb of Neuilly.”

Etete was asked to pay 150,000 Euros to Nigeria in compensation for moral prejudice and 20,000 Euros in fees. His front, Richard Granier-Defferre(French businessman) was  sentenced to 12 months imprisonment with a fine of 150,000 Euros.

It was unclear if Etete paid the moral prejudice fines into the coffers of the Federal Government. He is however running into one legal web or the other on the Malabu oil deal.

But, the most curious thing was that the former administrations of Obasanjo and Jonathan kept on relating with Etete and Malabu Oil and Gas even after he was jailed by a French court.

In July last year,  a London High Court ordered Etete to pay $110.5 million to a middleman who helped broker the controversial OPL-245 oil block.

Although the French Government in 2014 pardoned Etete through a warrant signed by the magistrate in charge of National Criminal Record, Xavier Pavageau, the trends of the deal indicated that the ex-minister never walked alone.

With the EFCC sent to swing into action, many underground accomplices of Etete would soon be unmasked.

According to a top source, those the EFCC may interact with include Adoke, former Petroleum Resources minister, Mrs. Diezani Alison-Madueke, one-time Attorney-General and Minister of Justice, Mr. Bayo Ojo, Daukoru, former Finance minister, Olusegun Aganga, former GMD of NNPC, Austen Oniwon and top officials of the Department of Petroleum Resources.

The Nation also learnt that some International Oil Companies (IOCs) are ready to appear before the EFCC with relevant documents on the intrigues of OPL 245.

Adoke has set the tone for the ongoing investigation in a letter to Vice President Yemi Osinbajo.

He wrote in the letter: “It is therefore incorrect and contrary to as widely claimed in some quarters that the money that was paid to Malabu, which was only warehoused in an escrow account, was meant for the Nigerian Government and that the country was thereby short-changed.”

The ball is in the court of the anti-corruption chief Ibrahim Magu to unearth the riddles surrounding the Malabu OPL 245.

The Economic and Financial Crimes Commission (EFCC) will begin full investigation into the $2 billion Malabu Oil Block in a matter of weeks. Already, some of those behind the deal have been running from pillar to post over the probe. MANAGING EDITOR YUSUF ALLI explores the facts and writes on the intrigues surrounding the ‘mysterious’ transaction.

ALMOST 18 years after  the award of Malabu Oil Block, the ghost of the deal is still haunting those who abused their privileged offices.

The Malabu Oil Block was awarded by the administration of former Head of State, the late Gen. Sani Abacha. But, the discreet award has attracted diverse interests, including high-wire politics of betrayal.

Its controversies have survived the administrations of the late Abacha, Gen. Abdulsalami Abubakar, ex-President Olusegun Obasanjo, the late President Umaru Yar’Adua and former President Goodluck Jonathan.  The contract is being revisited by the President Buhari administration.

Since the deal went awry, those involved in the contract have been in and out court in Nigeria and in the United Kingdom (UK). Like a recurring decimal, the more solution is found to the Malabu Oil Block crisis, the more fresh problems arise from the panacea.

How it all began

Armed with a vested interest in the oil sector, the late Gen Abacha came up with a policy in 1998 to strengthen Indigenous Exploration Programme Policy in the upstream sector by allocating oil blocks to local companies. The ‘lucky’ companies were expected to manage the oil wells in collaboration with International Oil Companies (IOCs) as technical partners.

The policy was later discovered to a decoy by the former Head of State some influential officers in the administration to have stakes in the oil sector.

The aspiring oil “Sheikhs” had a good ally in the then Petroleum Resources Minister, Chief Dan Etete, whose pseudo/front firm, Malabu Oil and Gas Limited, was allocated OPL 245 in April, 1998 by the Federal Government.

An unconfirmed source alleged that Etete might have floated Malabu Oil and Gas Limited in trust for the Abachas or if the ex-minister conceded equity in the ill-fated company to them.

“It is incontrovertible that there was an unwritten pact between the Abachas and Etete to hide a treasure but none of the parties has told the full story,” the source said.

The Abachas, whose patriarch (the late General) died in office in controversial circumstances, has been at daggers drawn with Etete over the deal.

In line with Federal Government’s guidelines, Malabu Oil and Gas Limited chose Shell Nigeria Ultra Deep Limited (SNUD) as its technical partner.

A document available to The Nation said: “The two companies executed relevant agreements including a Joint Operation Agreement in 2001.  Malabu asserts that it proceeded to operate OPL 245 as a sole risk venture in conformity with government’s guidelines.

“Malabu also assets that it negotiated with SNUD which took 40 per cent participating interests in the venture in a farm-in-agreement and that SNUD signed agreement with Malabu as its technical partner for the venture.”

A memorial submitted to International Centre for Settlement of Investment Disputes by SNUD gave further details.

SNUD claimed in the document: “In 1998, during the President Abacha military regime, OPL 245 had been allocated to Malabu on behalf of the Ministry of Petroleum Resources by Mr. Dan Etete in his capacity as the then Presidential Advisor on Petroleum and Energy. “Malabu was an indigenous Nigerian company, incorporated on 24th April, 1999, with Nigerian shareholders, apparently for the purpose of petroleum prospecting.

“In March 2000, Malabu approached Shell within a farm-in proposal. Malabu was looking for an international oil company to take a 40 per cent equity stake in the OPL 245 licence itself and ‘carry’ Malabu in developing the block i.e. the IOC would take all the exploration and development risk by funding Malabu’s share of the costs (including the acquisition, exploration and development costs of the block) as well as its own.

“Those costs would then be recovered by the IOC from Malabu’s share oil production.”

Genesis  of the crisis

The award of the OPL 245 to Malabu Oil and Gas Limited and the agreement with SNUD subsisted until Gen. Obasanjo, who was in 1995, jailed for life over an alleged role in a phantom Coup d’etat, became president.

He opted to review some contracts that were awkwardly awarded and oil blocks that believed to have been arbitrarily allocated. His administration also decided to trace looted public funds stashed abroad by late Gen. Abacha.

Based on security reports and other indices, Obasanjo, on July 2, 2001, wielded the big stick by revoking some oil blocks that were allocated with impunity or without due process.

Among the first casualty was OPL 245 owned by Malabu.

But, unknown to Obasanjo, vested interests in oil blocks had infiltrated his administration from the presidency to the Federal Executive Council (FEC), the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR), an agency saddled with responsibilities to allocate oil blocks.

As Obasanjo was adamant on revoking the oil blocks, including OPL 245, allocated to Malabu, top government officials were assuring the company and its partner (SNUD) that its block was intact.

The SNUD memorial said:  “Malabu’s representative provided Shell with a technical information brochure relating to OPL 245 and copies of the letter of allocation of OPL 245 to Malabu dated 29th April, 1998, a letter to the DPR attaching cheques in respect of the $2m “down payment” of the signature bonus and other fees and a letter confirming that the allocation had not been withdrawn dated 9th March, 2000.

 “At that time, several other oil exploration and development licences allocated by the Abacha regime had been withdrawn by the new civilian Government of President Obasanjo.

“Shell made enquiries from the Assistant Director of the DPR, Mr. Andrew Obaje, on 31 March, 2000. He confirmed to Shell that OPL 245 had been owned by Malabu since April 1998 and was currently in good standing.

“Obaje told Shell that the FGN did not intend to revoke the allocation because Malabu had paid all the required fees and part ($2.04 million) of the $20 million signature bonus for the block. The map of allocated concessions obtained from the DPR also indicated that Malabu was the owner of OPL 245.

 “Nevertheless, Shell decided to pursue negotiations with Malabu. On 4th October, 2000, Shell was approached by a new Malabu representative. He was known to Shell, because he had been employed as the Managing Director of Texaco in Nigeria until his retirement in mid-2000.

 “Shell received verbal assurances from the then Vice-President of Nigeria that there was no objection from the FGN to Shell acquiring an interest in OPL 245.”

SNUD also released the details of its agreement with Malabu Oil and Gas.

The document added: “On 24th January, 2001, Malabu and Shell executed a Heads of Agreement (HoA). The HoA set forth the major principles of agreement between Shell and Malabu regarding OPL 245.

“In the HoA, the parties acknowledged that there (would) be …. other items of significance to be negotiated in final definitive commercial agreement(s) in connection with the transaction proposed (therein) (thereafter) referred to as the (Definitive Agreements).

 “And Malabu agreed to Shell holding a 40 per cent interest in OPL 245 and being appointed contractor in respect of the licence, that Shell would pay, to and on behalf of Malabu, various amounts and that Shell would ‘carry’ Malabu.

 “Once the HoA was finalised and signed, work began on the Definitive Agreements (which included the Definitive Agreements), were intended to govern the parties’ relationship for the duration of the OPL 245 farm-in

 “The Farm-in-Agreement was to provide the basis for the farm-in-agreement whereby SNUD would acquire a 40 per cent interest in OPL 245, based on certain representations and warranties by Malabu, in return for making specified payments to, or for Malabu.

 “The OPL 245 Deed of Agreement was the actual instrument that would effect the assignment of a 40 per cent interest in OPL 245 from Malabu to SNUD.

 “The Operating Agreement was to define the parties’ respective rights and obligations in operating OPL 245 and in connection with OPL 245 itself.”

  On how the disputes over the oil block came up, SNUD traced it to the withdrawal of the allocation of OPL 245 to Malabu.

It said: “On 6th April, 2001, Shell delivered the signature bonus cheque in the sum of $17,960.000 and the Deed of Assignment and other Definitive Agreements, to Mr. Macaulay Ofurhie (Director of the DPR) and Mr. W.A Obaje (Assistant Director of the DPR) in person.

 “Upon receipt of those items, Mr. Ofurhie acknowledged that OPL 245 was still in good standing and Mr. Obaje stated that the allocation was valid for 10 years from April 1998.

 “On 12th April, 2001, Shell learnt that Malabu had received a letter dated 9th April, 2001 from the DPR, granting OPL 245 to it, authorising it to commence operations and confirming that the Deed of Assignment was due to be forwarded to the President of the Federal Republic of Nigeria(FRN) for approval early the following week.

 “On 20th April, 2001, Malabu told Shell that the DPR had confirmed that the conveyance of title had been signed by the President of the FRN and the Deed of Assignment would be approved very soon.

 “Seven days later, on 27th April, 2001, Shell was informed that the Deed of Assignment had been approved by the FGN and was for allocation at the DPR.

 “On 24th May, 2001, Malabu received the signed title deed of OPL 245 together with the co-ordinates of the licence area.

 “However, in approximately mid-June, reports appeared in the Nigerian press suggesting that – notwithstanding the assurances Shell had received from Malabu and the results of its own due diligence – certain individuals, whose names were not contained in any official records were claiming an interest in Malabu and/or OPL 245.

 “In early July 2001, Shell received news that the FGN had withdrawn the allocation of OPL 245 to Malabu.”

 The Federal Government’s letter of withdrawal dated July 2, 2001 stated:  “I, (the Director of Petroleum Resources) have been directed to inform you that the allocation of OPL 245 to Malabu has been withdrawn and the issued title deed has been revoked. You are therefore required to return the title deed of the block in your possession to the Department of Petroleum Resources please.

 “The FGN’s revocation was a shock to Shell as no explanation was given but Shell continued to hope that Malabu (together with Shell’s assistance) could reverse the FGN’s revocation. Shell did all it could do to assist Malabu to reverse the FGN’s decision.

 “Shell heard no more substantive developments until 19th February, 2002 when Malabu representative informed Shell that he was still confident that things were on the right track at all levels with the government.”

Giving further insights into how former President Obasanjo made a U-turn on the oil block and Malabu Oil and Gas, SNUD threatened legal action.

It said: “On 25th March, 2002, a Shell representative was suddenly and unexpectedly summoned to meet with President Obasanjo in Abuja the following day.

“Chief Olusegun Obasanjo (the President of the FRN), Mr. Gaius Obaseki, Mr. Kayode Are (the Director-General of the State Security Service), Mr. Funsho Kupolokun (Special Assistant to the President of the FRN on Petroleum Matters) and a representative from ExxonMobil were all present.

 “At the meeting, the President of the FRN informed Shell and ExxonMobil that OPL 245 would not be returned to Malabu and that Shell and ExxonMobil would instead be invited to bid competitively not for the role of licence-holder (as Malabu had been) but rather for the role of contractor for OPL 245 with NNPC holding the licence.

 “The President of the FRN said there was to be a simple and transparent competitive bidding procedure whereby Shell and ExxonMobil would submit sealed bid containing a proposed signature bonus and the highest bid would win the right to develop the block in accordance with the terms of a PSC. (As noted above, very few oil and gas companies had the experience in drilling in “ultra –deep” water, Shell and ExxonMobil being two).

 “On 7th April, 2002, Shell received a formal invitation to bid, dated 5th April, 2002, together with the Guidelines for Competitive Bidding on Block 245 from the Office of the Special Adviser to the President on Petroleum Matters.

 “Shell learnt that, following the invitation to bid, Malabu wrote directly to the FGN on 9th April, 2002 threatening to commence legal proceedings.

 “In response to that threat, on 29th April, 2002, the Office of the Presidential Adviser on Petroleum and Energy wrote to Shell to confirm that the Federal Government has revoked the prior award of this block to Malabu oil and Gas Limited.

“The decision to revoke the award was made solely in the best interest of the Federal Government in reliance on its rights under law and without any influence from your company or its affiliates or anyone else.

“Further to FGN’s letter, on 6th May, 2002, Shell wrote to Malabu setting out its position as to the frustration of the HoA and the Farm-in-Agreement and also giving notice of termination of both agreements.

 “On 13th May, 2002, Shell submitted its bid for the role of Contractor for OPL 245 on the basis of a PSC to which NNPC was the contractual counterparty.

 “On 23rd May, 2002, the Ministry of Petroleum Resources wrote to SNUD to confirm that it had been successful with its bid.”

The letter stated that:

“The allocated block would be operated on a ‘Production Sharing Contract” (PSC) basis. The Nigerian national (sic) Petroleum Corporation shall be the Concessionaire, while your company shall be the contractor’.

 “The PSC was executed and approved by the Presidential Advisor on Petroleum and Energy for and on behalf of Minister of Petroleum Resources, on 22nd December, 2003.

 “Under the terms of the PSC, SNUD obtained the ‘exclusive right’ to conduct petroleum operations (i.e. the winning or obtaining and transportation of petroleum or chargeable oil in Nigeria by drilling, mining, extracting or other like operations and all operations incidental thereto and any sale of or any disposal of dischargeable oil) in the area of OPL 245 for a period of 30 years.

 “The conditions of the approval were that SNUD would act as contractor, pay a signature bonus of $210 million and operate the block on a PSC basis with the NNPC as concessionaire and SNUD as contractor.”

After investing $535.9,

what next for Shell

“Following the execution of the PSC with NNPC, SNUD undertook major work and incurred substantial expenditure in connection with OPL 245.

 “SNUD paid the signature bonus of $210 million in December 2003. SNUD paid $1 million via bank draft on 23rd December, 2003. SNUD paid the remaining $209 million into an Escrow Account, pursuant to an Escrow Agreement with the FGN (as represented by the Ministry of Finance) and JP Morgan Chase which was signed on 22nd December, 2003.

“The total amount incurred in developing OPL 245 amounts to over $535.9 million.  SNUD had bore all the risks attendant upon the exploration and appraisal of the OPL 245 area.”