New twist in troubled Chevron’s Nigeria asset sale

The prolonged and troubled Nigeria asset sale by American international oil company, Chevron, appears to have taken a new twist, as it has  emerged that the oil major surreptitiously wrote separate letters on

October 9 and October 14, 2014 to the bankers of Britannia-U requesting  them to cancel the $250 million Irrevocable Stan-by Letters of Credit  (SBLC) posted on its behalf to effectively back its bid for the assets put up by Chevron for sale last year.

It is now 13 months since the SBLCs for $150 million and $100 million  respectively were issued and confirmed to Chevron but it would be the  first time that Chevron would officially be issuing anything resembling  an official confirmation of Britannia-U’s participation in the process,  although it is yet to issue any statement resembling the result of the  entire bid process against industry and analysts’ expectations.

Sources who followed the process last year had disclosed that  Brittania-U posted the highest bid for Oil Mining Leases (OMLs) 52, 53  and 55, the assets Chevron, the American multinational oil company put up for sale.

But the letters to Britannia-U’s bankers, First Bank Nigeria Limited and  Diamond Bank plc, the banks that facilitated the issuance of the  irrevocable SBLC, appear to have been written without recourse to a pending interlocutory injunction at the Supreme Court stopping Chevron   Nigeria  from unilaterally cancelling  the transactions involving  Oil Mining Lease OMLs 52,53 and 55.

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Chevron Nigeria in its letters to First Bank Nigeria and Diamond Bank  plc respectively, directed them to cancel the SBLC and stated that Brittania –U is not the successful bidder in the matter for which the Standby Letters of Credits were received by it, a move that is now being  interpreted as confirming fears expressed since last year by industry  observers, that Chevron was desirous of truncating the entire asset sale  process.

Bankers spoken to say it is against the norm for a company to whom a  SBLC is written to write directly to the bankers of the client who caused the SBLC to be issued in the first place. BusinessDay learnt at the weekend that Chevron did not write Britannia-U to inform it of its plan to do so, just as it has never written to it, to let it know the  outcome of the bid process. But BusinessDay understands that Chevron had  held meetings with officials of Brittania-U in Houston, United States  last year, during which some negotiations took place with a view to  reaching a deal on the asset sale.

One of the letters Chevron wrote to the banks and seen by BusinessDay,  read in part: “Re: Standby Letter of Credit Nos. 5132700050 and  5132700051. Chevron Nigeria Ltd “CNL” is the beneficiary of the above referenced Standby Letters of Credit. Applicant, Britannia -U was not  the successful bidder in the matter for which the Standby Letter of  credit was received by CNL. Accordingly, CNL, consents to the cancellation of this Standby Letter of Credit. Please confirm  cancellation of this Standby  Letter of Credit or provide instruction  if further action is required.”

Consequent upon this development, BusinessDay also learnt from the Supreme Court at the office of the Chief Justice of Nigeria (CJN), that  the CJN is now in possession of a protest letter sent in by the lawyers to Britannia-U, in which her attention has been drawn to the fact that   despite the interlocutory injunction filed by Britannia –U, Chevron has  by the letter written to these banks  demonstrated a calculated and   willful attempt to  over reach both the pending  motion and entire  appeal.

The lawyers, Rickey Tarfa and company, said they were by their letter to  the Chief Justice of the Federation, placing on record, its letter to the  counsel for Chevron and other parties regarding “unseemly steps that Chevron has resorted to, with undisguised intents to steal a match on our  client and render the motion and the outcome of the entire appeal nugatory.

“Other parties to the appeal have been placed on the notice of the  letter and we use this medium to appeal to my lord the CJN to give an  accelerated consideration to assigning an early date for the pending  motion for interlocutory injunction pending appeal,” the letter stated.

The lawyers had also earlier written to the counsel to Chevron, Uche Nwokedi and Company, intimating it about the letters Chevron wrote to the  banks ,in which it urged them to cancel  the Standby Letters of Credit.

When Chevron was contacted to comment on the letter, Deji Haastrup,  general manager, government and public Affairs, said:  “You know there  is a case in court and we don’t comment on a matter before the law courts” Brittania-U had filed an appeal at the Supreme Court seeking to overrule  a Court of Appeal’s judgement, which had ruled against the extension of the interim orders granted to Britannia-U by a Federal High Court.

  Chevron notified the losers that participated in the bid but continued  to drag its feet over declaring the winners.

Brittannia-U stated that it came to its notice that Chevron was  communicating with Seplat. They went to court to ask to be declared  winners of the auction after putting in the highest bid.

Brittania-U immediately secured a High Court injunction, preventing Chevron from transferring the assets to Seplat or any other bidder.

Chevron had sought to have the case thrown out for lack of jurisdiction , on the basis that it was a private commercial matter and further that it  should be referred to arbitration on the basis of the confidentiality agreement signed by the parties. The court ruled that there was a triable dispute over which it had jurisdiction.

Chevron, which appears to favour Seplat in the supposed closed bid  process, had appealed to the High Court against the interim injunction granted by the Federal High Court.

Olusola Bello