The Federal Government has expressed its readiness to restore the production of the Oil Prospecting Licence (OPL) 245, also known as Malabu Oil Well, in order to boost Nigeria’s crude oil output.
This follows Italy’s Eni’s (ENI.MI), suspension of arbitration, Monday, regarding an oilfield dispute with the Nigerian government, buying time to hold a conversion on the licence from prospecting to mining, Reuters reports.
The suspension is coming barely three days after Nigeria withdrew civil claims totalling $1.1 billion against Eni related to allegations of corruption in the OPL 245 deal.
Recall that The Tide’s source reported that the Federal Government is now ready to benefit from what is considered one of the juiciest oil blocks in Africa, the controversial OPL 245, for the first time in 25 years in a bid to ramp up Nigeria’s oil production output.
The oil block is estimated to hold over nine billion barrels of crude oil, nearly a quarter of the nation’s total proven oil reserves.
Confirming this report, the Nigerian Upstream Petroleum Regulation Commission (NUPRC) told the source that the Federal Government is open to the restoration of the Malabu Oil well.
The commission, however, said it was not in a position to provide further information on plans to activate the oil well but will do that after court proceedings have been completed and the issue is no longer subjudice.
In an emailed response to the source’s enquiry, the Head, Public Affairs and Communications, NUPRC, Mrs Olaide Shonola said, “The FGN is open to the restoration of the Malabu Oil well.
“However, more information will be provided after court proceedings have been completed and no longer subjudice”.
Meanwhile, Eni confirmed the suspension of the arbitration regarding OPL 245 oilfield at the World Bank’s dispute settlement body.
“Eni … has agreed with the Federal Government of Nigeria to mutually and temporarily suspend the arbitration proceedings in order to discuss with the government the necessary steps for achieving the conversion of the licence from prospecting into mining (extraction)”, an Eni spokesperson told the source.
Recall that Bloomberg had reported that Nigeria will waive the claims before Italy’s highest court “unconditionally” and “with immediate effect” no later than November 17.
The country also “irrevocably” waived the right to any further legal action in Italy against Eni, its affiliates, and current and past officers regarding rights for the field, known as Oil Prospecting License 245, or OPL 245.
Eni confirmed receipt of the letter and said in a statement that it was ready to consider, together with the government of Nigeria, the necessary steps for conversion of the prospective licence to one that will allow the development of the oil block.
According to Bloomberg, the Ministry of Justice was not immediately able to respond to a request for comment.
Operations at the country’s oil block have been halted for more than a decade by a series of trials and competing legal claims.
The area is considered to be potentially one of the richest concessions in the country, with recoverable reserves of 560 million barrels, according to Eni’s estimates.
Eni’s suspension of the World Bank arbitration means the company and its partner Shell Plc can finally begin to develop OPL 245.
Eni, Shell, and some of their former and current managers had already been definitively acquitted last year in a criminal case in Milan, in which they were accused of knowing that much of the $1.1bn they paid to acquire OPL 245 would be distributed as bribes.
Even after that verdict, a civil suit continued, with Nigeria seeking combined compensation of $3.5bn from Eni and Shell, claiming the amount reflected the real value of the licence purchased in 2011 by the two companies.
Authoritative sources say the Bola Tinubu administration is open to releasing the oil block to prospective developers, including local and foreign investors.
Specifically, it was learnt that Shell with headquarters in the Netherlands, and ENI, an Italian energy firm, which had both been involved in previous attempts to develop the oil field, are favoured to get President Tinubu’s nod.
In fact, an Oil Mining Licence, OML, may be issued to the two international oil companies, both of whom have been collaborating on the controversial oil block and the scandal-ridden OPL.
Already, the April 29, 1998 controversial licence to Malabu Oil & Gas Limited has now expired over two years ago and both Shell and ENI – the Dutch and Italian IOCs which had been involved in the oil block deals – have indicated willingness to partake in further development of the block if the Tinubu Presidency grants approval.
A statement from ENI says to further develop the oil block, investments running into billions would still have to be made by whoever gets the mining licence.
An Aso Villa source confirmed that the president is keen to explore the oil block, especially considering its huge reserves at a time that Nigeria’s oil output is struggling to meet its OPEC quota.
At the last count, in June this year OPEC had to reduce Nigeria’s future quota by over 20 percent from 1.74 mb/d to 1.38mb/d. This new quota will become effective next January if Nigeria’s output remains low.
Already the Federal Government has decided to end the legal cases abroad on the contention around the ownership of the oil block.
However, the former Attorney-General of the federation, Mohammed Adoke, SAN, who was the country’s chief law officer when an agreement was signed for Nigeria to be paid $1.1billion for OPL 245, is still facing prosecution in Nigeria on various allegations, including fraud and money laundering.
But inside sources say no conclusive evidence has been found to prove the allegations against Adoke, on which grounds the former AGF is seeking an exoneration with the emergence of a new administration.
The case against Adoke was brought by the Economic and Financial Crimes Commission (EFCC), and the case files are still open.
But investigators say certain properties were traced to Adoke suspected to have been bought with proceeds of the bribes drawn from the settlement of the case.

However, Adoke was said to have shown proof that the property was purchased through a bank loan.

Adoke also argued that he got then President Goodluck Jonathan’s approval for the agreement which saw the $1.1bn settlement money moved from Nigeria’s JP Morgan account in New York to two Nigerian banks where the money was allegedly shared to individuals, according to investigation documents seen by Empowered Newswire.
Specifically, it is believed that $800 million was paid to Malabu out of the over $1billion settlement. Nigeria got only about $200 million.
Several local and international court cases were instituted since the OPL 245 was questionably awarded on April 29, 1998 to Malabu Oil and Gas, RC 334442, owned by then petroleum resources minister, Dan Etete, and members of the late General Sani Abacha when he was the Head of State.
Meanwhile, authoritative sources also confirmed that the Federal Government is in fact aware that Malabu Oil and  Gas, owned by Dan Etete and members of the late General Sani Abacha never paid up the signature bonus of $20 million it was obliged to pay within 30 days of the licence grant.
Sources said Malabu initially only paid $2.04 million on May 15, 1999. The legal opinion, according to senior lawyers in the Tinubu administration, is that in fact “Malabu never earned a legal title to OPL 245”.
In 2019 President Muhammadu Buhari rejected a request from ENI seeking to convert the OPL into a mining licence. In the circumstances, authoritative sources say President Tinubu is much more favourably disposed to granting the request now.