Malami proposes ending OPL245 court cases to unlock economic benefits

Abubakar Malami, Nigeria’s minister of justice and attorney-general of the federation, has recommended that court cases related to the controversial Oil Prospecting License (OPL) 245 oil block be terminated by the Federal Government, as it has negatively affected the economy, particularly in terms of foreign exchange earnings, loss of taxable income and royalty payments.

Malami advised President Muhammadu Buhari, that terminating the cases will allow the country to enjoy the economic benefits of the controversial oil block while fossil fuels are still in vogue.

The OPL 245 is believed to be Nigeria’s most endowed oil block, but its development has been stalled since Buhari came to power in 2015. It has been at the centre of a long-standing dispute involving allegations of fraud and corruption in its acquisition and development by international oil companies and Nigerian politicians.

The offshore oil block in Nigeria contains one of the country’s largest oil reserves. It was initially awarded to Malabu Oil and Gas Ltd, a company owned by a former Nigerian oil minister, Dan Etete, during the regime of Sani Abacha in 1998.

However, the block was later controversially re-allocated to Shell and Eni in 2011 for $1.1 billion, a deal that allegations of fraud and corruption have dogged. Under President Goodluck Jonathan, the Nigerian government was a party to the deal, and it is believed that over $1 billion of the sale proceeds was siphoned off to private pockets.

In 2011, Shell and ENI paid $1.1 billion to acquire a 100 percent stake in OPL 245 after Malabu, the original allottee, relinquished its interest in the acreage — but foreign anti-corruption campaigners alleged that the transaction was shrouded in corruption.

The Nigerian government, in 2011, lost $1.7 billion in claims against JP Morgan Chase Bank over the transfer of proceeds from the sale of OPL 245 in 2011, in a judgement by an Italian court, which dismissed all corruption charges in the OPL 245 deal and discharged and acquitted all the defendants.

The Nigerian government had contended that the contract awarded to Dan Etete, to explore the deep waters off the Gulf of Guinea was corrupt, alleging that the bank “ought to have known” that there was corruption and fraud in the transaction, which saw Malabu sell its 100 percent in OPL 245 to Shell and ENI for $1.1 billion.

The Federal Government pursued both criminal and civil cases and has lost in foreign jurisdictions, but the prosecution has continued in Nigeria using the same evidence that failed abroad.

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The cases in Nigeria are prosecuted by the Economic and Financial Crimes Commission (EFCC). On February 6, 2023, Malami reminded Buhari of the string of losses Nigeria has suffered over the years in trying to prove corruption and fraud in the transaction.

The attorney-general said that upon the conclusion of the case in Milan in March 2021, Buhari — with advice from the Nigerian Upstream Petroleum Resources Commission (NUPRC) and the office of the AGF — granted consent to convert the oil prospecting licence (OPL) to an oil mining lease (OML) for NAE to commence production.

He recalled that Timi Sylva, then-minister of state for petroleum resources, wrote to ENI in May 2022 to convey Nigeria’s readiness to resolve all the issues, but the assurance “remains ineffectual as long as Charge CR: 151/2020 against ENI in Nigeria being prosecuted by EFCC remains in court”.

The final resolution depends on a proposal by the EFCC for compensation to Abacha by ENI. Abacha is claiming the ownership of Malabu Oil & Gas Ltd, the company awarded OPL 245 in 1998 by Sani Abacha, his father and then-military head of state.

He alleged that the ownership documents of the company were illegally altered, thereby denying him benefits from the $1.1 billion paid by Shell and ENI to acquire Malabu’s interest in the oil block.

The EFCC objected to the proposal to convert the OPL to OML and for the court case to be discontinued, saying it “did not consider the interest of the actual shareholders of the Malabu Oil and Gas Limited (Mohammed Sani Abacha and Pecos Energy Limited) culminating in the various litigations regarding OPL 245. This action has globally undermined the image of the Federal Republic of Nigeria”.

In a case filed in court by the EFCC against Malabu, Shell, Eni, Adoke, Aliyu Abubakar, Etete, and Rasky Gbinigie (Malabu’s company secretary), the anti-graft is alleging that they colluded to remove Abacha’s name as a director of Malabu.

According to reports, a man named “Mohammed Sani” originally had 50 percent in the company, with “Kweku Amafegha”, believed to be a pseudonym for Etete, owning 30 percent; and Wabi Hassan, the wife of Hassan Adamu, Nigeria’s then-ambassador to the US, was credited with owning 20 percent.

Mohammed Abacha, EFCC’s key witness, told the court that he was the “Mohammed Sani” but admitted that he did not pay for the shares in cash or by any other means.