A Federal High Court in Ikoyi, Lagos has granted an interim Mareva injunction popularly known as a freezing injunction directing commercial banks to block Shell Petroleum Development Company of Nigeria Ltd (SPDC) accounts in a bid to recover the cash value of more than 16 million barrels of crude oil allegedly diverted by the oil giant from AITEO Eastern E & P Company Ltd.
According to the court document seen by BusinessDay, Justice Oluremi Oguntoyinbo directed the 20 banks to “ring-fence any cash, bonds, deposits, all forms of negotiable instruments to the value of $2.7 billion and pay all standing credits to the Shell companies up to the value into an interest yielding account in the name of the Chief Registrar of the Court.”
The Chief Register is to “hold the funds in trust” pending the hearing of the motion and determination of the motion on notice for interlocutory injunction filed before it by AITEO.
Justice Oguntoyinbo gave the order following an ex parte application in suit No. FHC/L/CS/52/202 by AITEO Eastern E & P against SPDC and the other defendants with the 20 Nigerians banks as respondents.
In the law court, an ex parte application is used in emergency situations wherein there is not enough time for a standard motion to proceed.
Responding to the court order in a telephone interview with BusinessDay, Bamidele Odugbesan, media relations manager at SPDC, said the court decision was a temporary order and not a permanent judgement on the subject matter.
He dismissed the allegations that SPDC would underreport its crude oil, adding that the “claims are baseless and factually incorrect.”
“The SPDC and all Shell companies in Nigeria conduct their operations in accordance with applicable laws and industry best practices,” Odugbesan said.
Oil metering is one of the critical elements in the hydrocarbon value chain considering that it provides the production data upon which federally collected revenues such as royalty and Petroleum Profit Tax (PPT) are calculated.
Accurate metering of hydrocarbon streams has direct bearings on the revenue of both the operators and the government. However, despite its importance, hydrocarbon metering has been a problem in Nigeria’s petroleum industry.
The oil and gas industry watchdog, Nigeria Extractive Industries Transparency Initiative (NEITI) says unless the government takes appropriate measures, limitations in the metering of crude oil production will continue to pose a serious threat to the nation’s revenue target.
AITEO, alongside some other indigenous oil producers, have had a protracted dispute with Shell, alleging that the company short-changed them using the unapproved methodology to calculate the volume of crude it lifts on their behalf from the terminal.
The judge adjourned further proceedings till Wednesday, February 24.
