Jonathan denies complicity in alleged N155bn oil block scam

Ikechukwu Nnochiri

28 May 2012, Sweetcrude, ABUJA — PRESIDENT Goodluck Jonathan, Sunday, denied his alleged complicity in a N155 billion oil block scandal allegedly involving Shell and Eni subsidiaries in Nigeria, a Nigerian oil firm and a former Petroleum Minister, Mr Dan Etete.

The President who had kept mum since an online news medium, Premium Times, last week, disclosed that it had secured documents revealing how he (Jonathan) okayed the secret payment of N155 billion from the federation account to a private oil company owned by the ex-minister who was earlier convicted on a money laundering charge, described the allegation as baseless.

He insisted that “it has become necessary to issue a comprehensive response to these allegations to set the records straight.”

It will be recalled that a report by the United States-based anti-corruption NGO, Global Witness, said that Nigerian subsidiaries of Shell and Eni agreed to pay $1.092 billion to the Federal Government for oil block OPL 245.

The report which was entitled, “Shell’s obscure payments kill its case for weak US and EU transparency laws”, equally alleged that the Nigerian government then paid the entire N155 billion to Malabu Oil and Gas, a company owned by Mr. Etete, who was the oil Minister under late General Sani Abacha”.

Meanwhile, in a follow-up story, the online news medium contended that the money was paid on the order of President Jonathan, adding: “Our investigation also indicates that in order to cover up what is clearly one of the most elaborate corruption schemes in Nigeria’s history, the president tapped the junior minister in the Finance Ministry, Yerima Ngama, and Attorney General Mohammed Adoke to hurriedly transfer the funds to Mr. Etete on August 16, 2011, a day before the Minister of Finance, Ngozi Okonjo-Iweala, assumed office.”

Govt only acted as mere facilitator
Reacting to the allegations, Sunday, President Jonathan, through the Attorney General of the Federation and Minister of Justice, Mohammed Bello Adoke, SAN, stressed that contrary to the insinuations, the government only acted as “mere facilitator of an amicable settlement between two disputing parties over a long standing dispute with obvious economic implications for the country.”

In a statement he issued in Abuja, the AGF said: “The attention of the Office of the Attorney General of the Federation has been drawn to recent media reports containing allegations of round-tripping against the Federal Government as a result of the settlement agreement it brokered between Malabu Oil & Gas Limited (Malabu) and Shell Nigeria Ultra Deep Limited (SNUD) over their long standing dispute over the ownership and right to operate Block 245.

“In view of the misrepresentations and obvious mischief in reporting the role of the Federal Government, its agencies and officials in the settlement of the dispute, it has become necessary to issue a comprehensive response to these allegations so as to set the records straight and properly explain the role played by the Federal Government, its agencies and officials in accordance with this administration’s commitment to transparency and accountability in governance.

The genesis
“It will be recalled that in furtherance of the Indigenous Exploration Programme Policy introduced by the Federal Government in the early 1990s to encourage effective development of indigenous capability in the upstream sector of the oil industry, Malabu and other indigenous oil and gas companies were allocated oil blocks which they were expected to develop in partnership with international oil companies as technical partners.

“Malabu was allocated OPL 245 in April, 1998 and in accordance with the terms of the grant, it appointed SNUD as its Technical Partner. The two companies executed relevant agreements including a Joint Operation Agreement in 2001. Records indicate that SNUD took 40% participating interests in the venture in a farm-in- agreement and also signed agreement with Malabu as its technical partner for the venture.

“Although Malabu was issued a licence for Block 245 in April 2001, the same licence was subsequently revoked by the Federal Government on 2nd July, 2001. Exxon-Mobil and Shell were invited in April 2002 to bid for OPL 245 despite a subsisting contractual agreement between Malabu and SNUD with respect to OPL 245.

“Malabu was dissatisfied with the revocation and contended that the circumstances leading to the revocation of its licence on Block 245 was less than transparent and smacked of inducement and connivance from SNUD, its technical partner.

“Malabu also contended that the subsequent re-award of OPL 245 to SNUD by the Federal Government was done under questionable circumstances. It then petitioned the House of Representatives Committee on Petroleum to look into the matter. It is apposite 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 re-award, it made to Shell and return OPL 245 to Malabu, the original allotee of the Block.”

“Malabu also instituted Suit No. FHC/ABJ/CS/420/2003, before the Federal High Court (FHC), Abuja to enforce its claim to OPL 245. Although, the suit was struck out by the FHC, Malabu lodged Appeal No. CA/A/99M/2006 before the Court Appeal, Abuja, Division. During the pendency of the Appeal, an amicable settlement was entered into between Malabu and the Federal Government and in compliance with the Terms of Settlement executed by the Parties on the 30th of November 2006, OPL 245 was fully and completely restored to Malabu in consideration for its withdrawal of the Appeal.

“SNUD, apparently dissatisfied with the Terms of Settlement between the Federal Government and Malabu commenced arbitral proceedings against the decision of the Federal Government to restore/re-allocate OPL 245 to Malabu at the International Centre for the Settlement of Investment Disputes in Washington DC, and made representations to government on the impending arbitration. It also commenced a suit against the Government before the Federal High Court, Abuja.

“Although, several meetings were held between the Presidency, Ministry of Petroleum Resources, SNUD and Malabu, to resolve the dispute, no satisfactory outcome was achieved. Attempts were also made in 2007 to resolve the dispute by a Committee comprising the Honourable Minister of State, Petroleum Resources, the Attorney General of the Federation and Minister of Justice, Minister of Energy, Group Managing Director, NNPC and DPR, the issues could not be amicably resolved before the administration of Late President Umaru Musa Yar’Adua GCFR came to power.

“It is also important to note that SNUD had entered into a Production Sharing Contract with the NNPC in 2004 upon which their claim to OPL 245 was anchored and had paid $1Million US Dollars out of the $210 Million US Dollars signature bonus to the Federal Government, and kept the balance of $209 Million US dollars in an Escrow Account with J.P. Morgan pending the resolution of the dispute between Malabu and the Federal Government.

“In 2010, when this administration came to power, Malabu again, petitioned the Federal Government to implement the terms of the out-of-court settlement of 30th November 2006 on the basis of which they had discontinued their Appeal. Government also took cognizance of the pending cases instituted by SNUD against Federal Government of Nigeria (FGN) and/or Malabu, including Bilateral Investment Treaty (BIT) arbitration No. ARB/ 07/18 pending at the International Centre for the Settlement of Investment Disputes (ICSID Arbitration) 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 these actions on the public purse and opted for amicable resolution of the dispute.

“To resolve all the contending claims in a satisfactory and holistic manner, due regard was given to the Terms of Settlement of 30th November 2006 which had been reduced to Orders of the Court, the underlying policy of encouraging the participation 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 29th April, 2011 between the Federal Government of Nigeria and Malabu Oil & 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.

“In furtherance of the Resolution Agreement, SNUD and Eni agreed to pay Malabu through the Federal Government acting as an obligor, the sum of US$ 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 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.

“Government has overtime demonstrated its commitment to attract investment in the oil and gas sector of the economy and encourage genuine investors (local and foreign) by creating the enabling environment for their business to thrive. The resolution of the lingering dispute over Block 245 was in furtherance of that objective. Accordingly, the FGN, its agencies and officials should not be dragged into a purely commercial dispute between Malabu and its purported partners.

“It is also clear that the allegation of round-tripping levelled against the FGN is without basis and cannot be substantiated having regard the role it played as mere facilitator of an amicable settlement between two disputing parties over a long standing dispute with obvious economic implications for the country.”