The 20 Things We Know About The Malabu Oil Deal

There are 20 things we can tell you right now about a controversial and somewhat fraudulent oil deal in Nigeria, known as the Malabu Oil Deal, which recently came back to the front pages of Nigerian newspapers.

But before we start, you need to understand the meaning of OPL.

In Nigeria, oil companies have to first apply for an Oil Prospecting Licence or OPL.

Simply put, an OPL is a licence given to a company by the Nigerian government to prospect for oil in an area not more than 2,588.8 square kilometres for an initial period of three years.

That licence does not allow the company to drill oil. It only allows the licencee to look for oil for a period of three years, renewable for two years.

If a commercial discovery of hydrocarbon is made, then the licensee is eligible to apply for conversion of not more than half of the area into an oil mining lease (OML).

The OML confers on the holder exclusive rights to explore, win, produce and transport petroleum for the delineated area. The maximum duration of lease is 20 years, renewable for another 20 years on expiration.

With that background, we can proceed to discuss the Malabu oil deal.

1. The Malabu oil deal involved the procurement of one of Nigeria’s richest oil fields, “OPL 245”, by Shell and Eni in 2011 when Mr. Goodluck Jonathan was President. The oil field is said to have about 9 billion barrels of crude. Nigeria is estimated to have between 22 billion and 35 billion barrels of crude left.

2. Nigeria’s former oil minister, Dan Etete, who was convicted for money laundering in France, owns Malabu Oil and Gas Limited.

3. The company was incorporated five days before the oil block was awarded to it in 1998 during the regime of military dictator, Sani Abacha who died that year.

4. To put it in perspective, Dan Etete, who was oil Minister in Nigeria, incorporated a company that was awarded an oil block five days after it was incorporated!

5. But, as an oil minister, it would have been illegal for him to award an oil block to himself. And Mr. Etete registered the company with a fictitious director, Kweku Amafegha. The company also listed a fake address in registration documents.

6. Mr. Etete confessed to a British court in 2013 that former President, Olusegun Obasanjo, who was sworn into office in 1999 and left in 2007, demanded  a slice of the oil block as bribe.

7. In any case, Shell and Italian company Eni so much wanted that oil field that they secretly paid about $1.1 billion dollars for it. The money might have officially been to transfer the licence from Mr. Dan Etete to Shell and Eni.

8. By that time, Mr. Etete had already been convicted in France and Shell and Eni claimed they did not want to transfer the money to Malabu Oil Limited.

9. So they transferred the money to an account belonging to the Federal Government of Nigeria.

10. The money was paid into Nigeria’s accounts in JP Morgan bank in London.

11. But, shortly after, the federal government of Nigeria transferred $801 million of the money into Malabu accounts controlled by Mr. Etete in Nigeria.

12. Mohammed Adoke, the former Nigerian Attorney General, Diezani Alison-Madueke, ex-Petroleum Minister and Minister of State for Finance, Yerima Ngama, authorised the transfers.

13. With the money in its bank accounts, Malabu subsequently transferred some to shady companies with fake addresses.

14. It is believed that the money was transferred to those companies to bribe many government officials.

14. Mr. Etete later claimed he only got $250 million from the money.

15. Mr. Adoke has denied any wrongdoing, saying, as Attorney-General, he only acted as an intermediary to resolve the whole issue.

16. Those who were bribed included some alleged officials in the Jonathan administration, as well as some private officials including Bayo Ojo, a former Attorney General, who was said to have received $10 million.

17. A corruption scandal shortly blew open.

18. The OPL 245 deal was being investigated by officials in Nigeria, Italy, the UK, the U.S. and the Netherlands.

 19. The EFCC recently filed charges against Mr. Adoke.
20. Mr. Adoke in a lengthy letter denied any wrongdoing. He said the charge was irrational but was prepared to make himself available to defend it at the appropriate time.

He said he did not benefit in any way from the auctioning of Oil Prospecting Licence 245(OPL 245), popularly referred to as Malabu Oil Block.

Adoke, in a statement, said he got requisite approvals from the former President Goodluck Jonathan to broker the settlement and execute the OPL 245 Settlement Agreement.

The statement reads: “My attention has been drawn to the charges filed by the EFCC against me and other named individuals and companies in respect of OPL 245 Settlement Agreement involving Malabu Oil & Gas Limited and Shell Nigeria Ultra Deep Limited.

“The charge of aiding the commission of money laundering offences preferred against me has finally confirmed the orchestrated plans to bring me to public disrepute in order to satisfy the whims and caprices of some powerful interests on revenge mission.

“I wish to reiterate that I acted within the actual and ostensible authority of the office I occupied to broker a settlement between Malabu Oil & Gas Limited and Shell Nigeria Ultra Deep Limited in order to ward off the over $2billion liability in damages for breach of contract which the country would have been exposed to in the likely event of the success of Shell Nigeria Ultra Deep Limited’s claim before the International Centre for the Settlement of Investment Disputes (ICSID).

“The Terms of Settlement ensured that the interests of the Federal Government of Nigeria, Malabu Oil & Gas Limited and Shell Nigeria Ultra Deep Limited were duly acknowledged and provided for in the Settlement Agreement.

“The Federal Government of Nigeria was entitled to the Signature bonus which was duly paid; Malabu Oil & Gas Limited surrendered its title to OPL 245 for a consideration and Shell Nigeria Ultra Deep Limited was re-allocated OPL 245 which it had previously substantially de-risked in consideration for withdrawing their over US$ 2billion claim for breach of contract against the Federal Government of Nigeria.”

Adoke gave more insights into why the Jonathan administration executed the Settlement Agreement.

He added: “Since the Parties aforementioned, faithfully discharged their respective obligations under the Settlement Agreement, one cannot comprehend how the Office of the Attorney-General of the Federation which brokered the Settlement was expected to renege from the agreement by denying Malabu Oil & Gas Limited the benefits associated with the relinquishing of their title to OPL 245 already warehoused in a joint FGN/Shell Escrow account, or to prevent the subsequent re-allocation of the relinquished OPL 245 to Shell Nigeria Ultra Deep Limited when the company  had already furnished consideration for it to the Federal Government of Nigeria.

“I am of the respectful view that it should be clear to any person dispassionately reviewing the transaction to confirm that I had no personal interest in the transaction; I did not take any benefit from it, I had requisite approvals from the President and Commander in Chief of the Federal Republic of Nigeria to broker the settlement and execute the OPL 245 Settlement Agreement.

“I am therefore unable to rationalise the charge of aiding the commission of money laundering offences preferred against me by the EFCC.  But be that as it may, I hope to at the appropriate time make myself available to defend the charges for what whatever its worth.

To be continued……


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