A Federal High Court in Abuja has set aside the purported reversal of the consent given by the Federal Government for the farm-out agreement between Chevron and Transnational Energy Limited (TEL) on the Abigborodo and Hely Creeks marginal fields in the Oil Mining Lease (OML) 49.
The court, in a judgment by Justice Taiwo Taiwo, upheld the plaintiffs’ claims and granted all the reliefs sought, including an award of $20million in damages against the defendants, who are all Federal Government’s agents.
The judgment was on a suit, marked: FHC/ABJ/CS/1067/2020, filed by Transnational Energy Limited (TEL) and Bresson A. S. Nigeria Limited.
Defendants were Minister of Petroleum Resources, Minister of State, Petroleum Resources, Department of Petroleum Resources, National Petroleum Investment and Management Services (NAPIMS) and the Attorney General of the Federation.
The plaintiffs, through their lawyer, Dr. Sijuade Kayode, claimed that a farm-out agreement over the two marginal fields was concluded between TEL and the joint venture operators, Chevron Nigeria Limited in 2017 for amongst others purposes, to provide feedstock to a gas-to-power project developed by TEL and its partners, which started in 2012.
They stated that the Department of Petroleum Resources (DPR), in a letter dated 20th February, 2017, conveyed a letter of ministerial consent by the Minister of Petroleum Resources approving the farm-out and its terms.
The plaintiffs added that the DPR, in its said letter, equally directed TEL to pay a prescribed premium to Federal Government, after which the farm-out will become effective, a directive TEL complied with by paying the prescribed fee of $639,820.65.
Rather than allow the plaintiffs enjoy the benefits of the agreement after the FG acknowledge receiving TEL’s payment, the then Chief of Staff to President Muhammadu Buhari, the late Abba Kyari wrote a memo, purporting to revoke the earlier ministerial consent, claiming to have acted on the instruction of the President.
They added that the DPR, without any notice to the farmee (TEL) put the two fields in the 2020 marginal fields basket, even though the fields were not part of the original 57 of fields approved for the bid round, a decision TEL and its sister company in the power business (Bresson A.S. Nigeria Limited) challenged by filing the suit.
The plaintiffs exhibited their audited accounts, business plan and financial model which showed that both plaintiffs had jointly expended $22,718,000.00 on the development of the gas and power side of the project.
They also exhibited their financial models in arguing that they have lost over $164million due to the actions of the defendants, while Federal Government may have equally lost over $68million in royalty and taxes not earned as a result of the actions of the defendants.
They plaintiffs asserted that their gas-to-power project elicited a massive international cooperation spanning over 15 countries and involving over 100 international experts.
“As a matter of fact, the Hungarian Exim Bank went to parliament to amend its legislation in order to raise her scope of participation in the power side of the projects,” they said.
Justice Taiwo, in the judgment delivered on October 18, 2020, a copy of which was made available on Friday, held that the defendants failed to supply counter evidence and arguments to disprove the plaintiffs’ claims.
The judge noted: “One thing that is very clear and undeniably so, is that the averments of the plaintiffs, from the inception of the meetings and correspondences between the plaintiffs, Chevron Nig Ltd, the third defendant (DPR), NNPC and NAPIMS on the farming out by Chevron Nigria of the Hely Creek and Abigborodo marginal fields within OML 49 were not denied.
“From the preponderance of the facts and documents attached to the affidavits of the plaintiffs in support of the application, I find and I hold that the plaintiffs have proved that they are entitled to the declaratory reliefs being sought,” the judge said.
Justice Taiwo, who upheld NAPIMS’ claim that it was not a juristic person and excluded it as a party, expressed displeasure at the conduct of the defendants in relation to issues leading to the dispute and asked governments and their agencies to always abide by contractual agreements duly entered.
He wondered why the the defendants turned around to dispute the presidential consent given for the farm out agreement between TEL and Chevron after the Ministry of Petroleum accepted the $639,820.65 the plaintiffs paid to the FG and which payment the ministry acknowledged.
The judge added: “The defendants cannot be allowed to resile from their obligation under the contract or agreement where they have benefited. Money was paid into the coffers of the Federal Government of Nigeria by the fist plaintiff (TEL).”
Justice Taiwo held that neither the then Chief of Staff to the President nor NAPTIMS and DPR has the power to issue any letter reversing the farming out agreement as they purported to have done.
“Governments and their officials must not, without legal reasons, terminate contracts at will and without recourse to their conscience, where as, in this case, as held above, that the plaintiffs have put in substantial efforts and expended monies in the project.
“It is even bad that the defendants have not offered to refund the money paid by the first plaintiff in this matter. The purported revocation, if I may use the word, leaves one to think that there are facts suppressed by the defendants,” he said.
The judge proceeded to, among others, affirmed the consent already granted TEL in relation to the farm out agreement, validated the payment made by the company as approved premium for the consent and ordered the defendants to take all necessary steps to allow the plaintiffs unhindered access and possession of the said Hely Creek and Abigborodo fields.
It was learnt from the court’s registry that one of the defendants has applied for stay of execution of the judgment upon filing a notice of appeal.
But, the plaintiffs, it was gathered, are favourably disposed to an amicable resolution of the dispute in view of the financial costs to both parties, and particularly its impact on the main aim of the agreement, which was to provide gas for power plants.
BUA Group, A’Ibom Sign MoU For Refinery’s Access Road
Bua Group has signed a memorandum of understanding, (MoU), with Akwa Ibom State Government, and the host communities in Ibeno Local Government Area, for the construction of access road to the proposed Bua Refinery and Petrochemical plant site in Ibeno, last week.
Akwa Ibom State Commissioner for Power and Petroleum Development, Dr. John Etim, who presided over the signing of the MoU, applauded BUA for their commitment to the project, prompt documentation and the preparation of the site towards the construction of the refinery.
Etim said that the refinery project will bridge the gap between host communities and Akwa Ibom State, thereby bringing about more developments in the oil and gas sector of the State.
The Commissioner called on all parties concerned to be committed to the terms of agreement and to ensure that peace dominates their relationship, while appealing to the host communities to protect the facilities which is now in their custody
“The refinery and petrochemical project is in line with the Governor’s vision to industrialise the State, develop local capacity in key industries where value can be added and raw materials sourced locally.”
Speaking shortly after the MoU signing, the Chairman of Ibeno local government, Williams Mkpa, expressed delight over the development, describing it as a giant stride in the industrialisation vision of the Akwa Ibom State Government.
The paramount ruler of the area, Owong Effiong Archianga, assured the company of his people’s unalloyed support and cooperation to see to the actualisation of the project.
CSO Urges Oil Communities To Challenge PIA In Court
A Civil Society Organisation, Policy Alert, has faulted President Muhammadu Buhari’s signing of the Petroleum Industry Act 2021, urging communities to test the provisions of the Act before the courts.
President Buhari had signed the erstwhile Petroleum Industry Bill, PIB, into law last Monday amidst protests from community groups and many other stakeholders that the Bill do not adequately cover the rights and interests of the host communities.
In a statement signed by its Communications and Stakeholders Engagement Officer, Mrs. Nneka Luke-Ndumere, Policy Alert, which is working for economic and ecological justice, described the presidential assent to the PIB as “grossly insensitive and problematic.
“It is sad that the bill has been assented to in the most controversial manner despite its many obvious flaws and its rejection by many stakeholders,” the statement read.
It added: “For example, the controversial provision for a direct payment of 30 percent profit oil and profit gas to the Frontier Exploration Fund potentially shortchanges the oil producing states and local governments of some of its thirteen percent derivation as it bypasses the requirement in section 162 (2) of the 1999 Constitution (as amended) which provides that all revenues be channeled through the federation account.
“This is most unfair, viewed against the ceding of only three percent of previous years’ operating expenses to the Host Communities Development Trust Fund and the punitive provision to charge costs of any damage to facilities against the community’s Fund, among other obnoxious provisions.
“That Mr. President has gone ahead to give assent to these vexing provisions only reinforces the politics of exclusion and expropriation that has for long characterised the relationship between the Nigerian state and the oil producing communities.
“We are also concerned that the host communities’ component of the legislation flies in the face of one of its stated objectives to address tensions between host communities and companies as it has all the ingredients for escalating rather than abating such conflicts.
“At a time when fossil fuel investments are being deprioritised elsewhere as a result of the global energy transition, it is unfortunate that this Act failed to provide a bridge between the current era of fossil fuel dependency and the low-carbon energy future that Nigeria aspires to within the framework of government’s much vaunted commitments under the Paris Agreement.”
The statement also said: “Granted, the new legal framework introduces some predictability and clarity to the governance and fiscal arrangements in the oil and gas industry. We are also not oblivious to certain clauses that respond to some of our earlier demands, such as those providing that the Board of Trustees of the Host Communities Development Trust will now be determined in consultation with the host communities, with membership drawn from community members. But that is just as far as it goes.
“As a tool for improved benefit sharing to host communities, the Act falls flat on its face. It actually ridicules the exertions of the host communities and advocacy groups that have clamoured over the years for a law that yields some space for participation, direct socio-economic benefits and environmental remediation for oil-rich communities.
“The theatre of action will now have to move to the communities and the courts of law. As implementation of the Act gets underway over the next 12 months, we urge host communities and civil society groups to begin to seek interpretation of some of its more controversial provisions before the courts.”
Kyari Tasks Greenfield Refinery On Fuel Importation
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has charged members of the Board of the NNPC Greenfield Refinery Limited (NGRL), to explore all available options to bring an end to the current challenge of petroleum products importation.
Mallam Kyari gave the charge Thursday while inaugurating the Board of the newly incorporated subsidiary of the Corporation, NNPC Greenfield Refinery Limited (NGRL), at the NNPC Towers, Abuja.
The NNPC Greenfield Refinery Limited is a subsidiary of the Corporation set up in December 2020 with a mandate to oversee the establishment and operation of new refineries.
The GMD, who is also the Chairman of the NGRL Board, challenged members of the Board to focus on profitability in order to remain afloat and avoid liquidation.
“As a business, this is a big opportunity for us and this company’s balance sheet must change positively. Going forward, with the Petroleum Industry Act (PIA), I can tell you that if you continue to post negative for three years, you are out. So, there is really no excuse”, Mallam Kyari stated.
He urged the Board and Management Team of the new company to set up a proper structure with the required skills, technology and financing to drive the company’s operations, adding that he was optimistic that the company would be able to achieve its mandate.
“Our company must grow and we can’t do well except we are able to process our production whether it is the liquid or gas. If we don’t monetise it then we have done nothing. This is really a new chapter and we are committed to making it work,” he said.
The NNPC helmsman stated that all the Corporation’s initiatives in the areas of new refineries, condensate refineries and equity acquisition in credible private refineries were geared towards ensuring energy security for the country.
In his remarks, the Alternate Chairman of the Board and Group Executive Director, Refinery and Petrochemicals, Engr. Mustapha Yakubu, declared that the operations of the company would be guided by the principles of cost effectiveness in line with the new Petroleum Industry Act (PIA), noting that profitability would be the key focus.
Speaking in similar vein, the Group General Manager, Greenfield Refineries and Project Division (GRPD) and Managing Director of the NGRL, Engr. Bege Talson, disclosed that the Division was working with third party investors to establish greenfield, modular and condensate refineries with a combined capacity of 250,000barrels per stream day (bpsd).
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