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.