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OML 11 judgment: Matters arising


For over five decades, the Oil Mining Licence (OML) 11 has been unable to avoid controversy. Fresh matters that require urgent attention have come up, writes CHINAKA OKORO

OML 11 occupies a “special” place in the annals of Nigeria’s petroleum industry.

It is, many industry watchers say, the most prolific and also the most problematic having been mired in controversy for over five decades beginning from the end of the civil war when destruction of well heads, especially wells in Ogoni land, led to massive environmental degradation.

That despoliation of fishing and farming land has remained a major bone of contention between the oil company, Shell and its Ogoni host community.

Shell has never denied that there was an environmental catastrophe. While it accepts the fact, it insists that it is not culpable even though the company has helped with efforts at remediation.

Shell insists on its website that the case has its “origin in a spill caused by third parties during the Nigerian Civil War, a challenging period which resulted in significant damage to oil and gas infrastructure in the Niger Delta region. While SPDC does not accept responsibility for the spill, the affected sites in Ejama Ebubu community were fully remediated, and this was certified by the government regulator”.

The agitation over further remediation led writer and satirist Ken Saro Wiwa to drop the toga of writer and don the armor of activist. That activism would end in tragedy when in 1995, then head of state, Sani Abacha superintended over Saro-Wiwa’s judicial murder.

That state sanctioned murder was bad business for Shell. It put the company in the bull’s eye of environmentalists and the local community. There would be court cases and claims of compensation. Some have been settled. Offers have been refused and the legal brick bats have moved from the trial courts, to the appellate court before ending at the apex court. Shell won some while the community also won a few.

Five years after Saro Wiwa’s death, the Ejama Ebubu community brought a claim for N17 billion as damages against SPDC in 2001. The case dragged on at the Federal High Court of Nigeria till 2010 when the court gave judgment against SPDC. Shell promptly appealed and its prayers were granted but with a proviso; an order to stay the execution of the judgment would take effect upon the provision of a bank guarantee issued by First Bank of Nigeria Limited in favour of the claimants.

At some point, the Anglo Dutch conglomerate made an offer to pay the Ejamba Ebubu community N7 billion as settlement. That offer was refused.

By 2020, the wheels of justice had ground slowly as usual and ended in favour of the community. On Monday, March 2, 2020, a Federal High Court sitting in Abuja issued an order attaching N182 billion in First Bank of Nigeria Limited’s statutory account with the Central Bank of Nigeria (CBN) in favour of Ejama Ebubu community in Rivers State. The money had ballooned from N17 billion to N34 billion and now N182 billion.

According to Shell, it along with “other parties affected by the March 2, 2020 order of the Federal High Court filed separate appeals, as well as applied to set aside the order and restrain its execution pending the appeal decision. In accordance with the spirit of fair hearing in the Nigerian judicial system, we remain of the view that until the pending appeals are heard and determined, SPDC is not liable to make any payments, and therefore none of its assets or interest should be attached to satisfy the judgement.”

But while the legal tussle was going on the community had tried to collect on their claims. They failed in London but back home in Nigeria, the Rivers State government ostensibly championing the cause of the community decided to buy up Shell’s 45% equity in OML 11 and the contiguous Kidney island which serves as logistics support base for Shell and other companies within the community and they include Moni Pulo, Oriental Energy, Conoil, Amni and Century Energy.

Governor Nyesom Wike, through the state’s Attorney General, made a bid of $150m for Shells 45% equity and soon declared his state the new owners. That purchase was affirmed by a Rivers State High Court in August 2020 and Shell wasted no time in expressing its disappointment.

The company’s attempt to get the Supreme Court to intervene failed on Friday November 27, 2020. Shell had prayed the Supreme Court to set aside the N17 billion judgment it made against the company in 2019 when the apex court upheld the earlier judgment of the Court of Appeal.

Shell’s argument was that the Supreme court did not consider the merits of its appeal before upholding the decision of the appellate court.

On Friday November 27, the Supreme Court in a unanimous decision delivered by Justice Centus Nwese noted that the appeal filed by the oil company was “frivolous” and “lacked merit” and so dismissed it for being “incompetent and lacking in merit”.

Now with the legal options all but exhausted what happens next? Can Rivers State now take over the assets even though the Ogoni community insists they were not carried along and agencies of government like the DPR were also not in the in the know? If they do, what will they do with it? Already there have been speculations regarding Sahara Energy being named as operator.

As things stand, any wrong move could lead to another wilderness journey for one of the most prolific and important oil and gas assets in Nigeria one which also provides a logistic and operational support for key operators.

The loss by Shell and the huge claims it has to pay has been described by a British court as ‘breach of natural justice’ “materially over-stated”. If it is forced to pay that amount, will it still remain in Nigeria and even if it does, what signal does it send to other foreign companies desirous of investing in Nigeria?

There is also the other issue of how well indigenous oil and gas companies have fared after taking over divested assets. Aside from Seplat, how many have made a success of their ventures?

As the days go by and the saga unfolds, the hope is that reason will prevail and egos will be in check so that the most workable solution is arrived at.

The wells must keep bringing up oil and Kidney Island must stay operational so that companies, such as like Amni, Conoil, Oriental Energy, Moni Pulo and Century Energy, can continue their businesses unhindered.

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