Malabu Deal:How Adoke, Ngama Abetted $1.1bn Oil Block



Despite frantic denials by Shell Nigeria of a round-tripping deal between it, ENI and the federal government over Oil Block 245, evidence of the clandestine deal was exclusively obtained by LEADERSHIP yesterday.

A copy of an agreement signed in April 2011, confirmed that Shell Nigeria Ultra-Deep Ltd, Shell Nigeria Exploration and Production Company Ltd, Nigerian Agip Exploration Ltd, Nigerian National Petroleum Corporation and the federal government of Nigeria indeed entered into an agreement that culminated in the payment of $1.1bn to Malabu Oil and Gas Limited.

The federal government was represented by the attorney-general of the federation and minister of Justice; the minister of state for finance; and the petroleum resources minister.

Investigations revealed how the ministers in April 2011 brokered the agreement to sell the controversial Oil Block 245 to Shell and pay Malabu Oil and Gas from the proceeds.

According to a resolution agreement reached in April 2011 between the federal government and Malabu Oil and Gas Limited, the federal government agreed to pay Malabu the sum of $1.1billion in full settlement of the claim to the oil block, provided the company discontinued all pending suits in the matter.

Apart from the agreement with Shell and ENI, the federal government also signed a separate agreement with Malabu, possibly within days of its agreement with Shell and ENI, to pay the Malabu for the oil block.

Specifically, the agreement between Shell, ENI and the federal government stated, among other things, that within five days of the grant and delivery of OPL 245, ENI’s local subsidiary, Agip, will pay the sum of $1,092,040,000 to the federal government on behalf of itself and Shell.

The twist, however, was that Malabu had surrendered the same oil block to the federal government (in an April 29, 2011 agreement) over objections by ENI that it could not close the deal with Malabu because of claims by Mohammed Abacha that the shares of the company, in which he also had an interest, had been tampered with by Dan Etete.

Details of two out of the four agreements were later filed in the Supreme Court of the State of New York by one Ednan Agaev of International Legal Consulting (ILC) when he fell out with former petroleum minister, Dan Etete, who is believed to have substantial interest in Malabu.

Agaev claimed, among other things in his affidavit, that he was the one who advised Etete to approach the federal government to restructure the deal as a way of clearing the hurdle for the Shell-ENI bid.

Under the structure, Malabu was to surrender OPL 245 to the federal government as if it was revoked. The federal government, on its part, was then to reallocate the oil block to Shell-ENI, collect the money from Shell-ENI and transfer it to Malabu.

Agaev sued Malabu on behalf of ILC over an alleged breach by Malabu to pay 6% of the “success fee,” or $65.5 million of the $1.1 billion for the sale.

Investigations showed that within one month of the signing of the deal, substantial transfers were made in favour of Malabu by the federal government on the watch of the minister of state for finance Yerima Ngama and the justice minister Mohammed Adoke.

According to one of the documents, “On May 24, 2011, the sum of One Billion, Ninety-Two Dollars was paid into depository Escrow Account No 41454193 domiciled in JP Morgan Chase Co, London.

“In a transaction that seemed to be a consideration of the subject matter, on August 16, 2011, the federal government of Nigeria through the minister of state for finance, Dr. Yerima Lawal Ngama and the attorney-general of the federation instructed the release of the sum of Four Hundred and One Million, Five Hundred and Forty Thousand Dollars (401, 540, 000 Dollars) into Account No 2018288005 in the name of Malabu Oil and Gas Limited domiciled in First Bank of Nigeria Plc and the sum of Four Hundred Million Dollars into Malabu Oil and Gas account No 3610042472 domiciled with Keystone Bank (former bank PHB Plc). JP Morgan complied with this instruction and made the transfers on August 23, 2011.”

It would be recalled that the federal government had, during the regime of Late Gen. Sani Abacha, on April 29, 1998 granted an Oil Prospecting License (OPL) to Malabu Oil and Gas Limited. On March 30, 2001, Malabu entered into a farm-in agreement with Shell Nigeria and assigned 40 per cent equity interest to Shell in the oil block.

On July 2, 2001, the federal government revoked the sale of the oil block and later, on May 23, 2002 awarded the block to Shell on a Production Sharing Licence (PSL). By December 22, 2003, the federal government granted Shell the right to exclusively operate the block as a contractor for 30 years.

Following the revocation and the execution of the PSL granted Shell, “various law suits involving FGN, Malabu and SNUD (Shell Nigeria Ultra-Deep Limited), were filed to determine disputes arising from the revocation of OPL 245 by the FGN,” part of the resolution agreement read.

On November 30, 2006, the federal government executed a settlement agreement with Malabu, admitting no liability and agreed to reallocate the oil block to Malabu. The agreement also entailed that Malabu releases the FG from all claims and suits in connection with the revocation.

Following this settlement agreement, more legal battles ensued from the SNUD to enforce the 2003 PSL granted it by the federal government. Again, on July 2, 2010, the federal government issued a letter to Malabu, reallocating the block.

It would be recalled that yesterday, LEADERSHIP published a story by Global Witness, an international watchdog, accusing Shell, ENI and the federal government of hiding behind a finger in a transaction that has further exposed the sordid corruption in Nigeria’s oil industry.

The ownership of Malabu – still hotly contested – but linked to top public office holders who allocated the oil block to themselves while they were in office has deepened concerns in many circles.

In interviews by our correspondents on Tuesday, the Nigerian National Petroleum Corporation denied knowledge of the round-tripping.

Meanwhile, the Senate president David Mark had on Tuesday directed a panel to investigate the round-tripping deal. However, the panel which had an emergency closed-door session on the issue yesterday afternoon will continue further deliberations today.

The chairman of the Senate committee on information, media and public affairs  Enyinnaya Abaribe, who is also a member of the panel, told one our correspondents that the panel’s deliberation was not conclusive.


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