Shell and Nigerian Government Sued by Malabu Oil

Malabu Oil is suing several Shell subsidiaries and the Nigerian government over exploration rights to Block 245 offshore Nigeria. The small Nigerian oil and gas company alleges that the Nigerian government had granted it rights to Block 245 in 1998 but that government officials took bribes in exchange for reallocating the block to certain Royal Dutch units. The suit states that seismic studies of block 245 indicate that it has almost 3 billion barrels of oil reserves. The suit, filed in Manhattan federal court, seeks more than $1 billion in compensatory damages and unspecified punitive damages.

Defendants in the suit are the Federal Republic of Nigeria, the Nigerian Ministry of Petroleum Resources, Shell Nigeria Exploration and Production Co. Ltd., Shell Petroleum Development Co of Nigeria, Royal Dutch Petroleum Co. and Shell Transport and Trading Co.

A Shell spokesman in New York said he was not aware of the suit and could not comment on the specific allegations. However he said that that the company has publicly stated its business principles that include "we will not tolerate corruption or the giving or taking of bribes."

The suit alleges that the scheme took place in Nigeria, the United States and Spain. "Shell's conduct included the improper use of its economic influence in Nigeria through the payment of bribes to senior Nigerian officials as well as improper campaign contributions," the suit alleged. It alleges that the Nigerian government allowed Shell to participate in a secret bidding competition during the spring for Block 245. Malabu alleges that it was excluded from the bidding.

It alleges that on July 2, the Nigerian president directed that the block be taken from Malabu and that the title deed be revoked. "Nigeria has never given a basis or justification for the taking to Malabu," the suit alleged.


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