Nigeria Gov't Orders Shell to Pay Malabu $550 Million

The Nigerian House of Representatives' Committee on Petroleum Resources has ordered Shell to pay $550 million to Malabu Oil and Gas Limited as compensation for damages resulting from the revocation of OPL 245 operating license awarded Malabu by the Abacha administration. Of the amount, $150 million is the cost of contractual agreement Shell allegedly owed Malabu.

The House recommended that the license be returned to Malabu Oil and Gas Ltd., saying the reasons provided by the Department of Petroleum Resources (DPR) for the revocation of the license was insufficient.

In the report of its investigation on the revocation of OPL 245 license, the House committee held that Shell should not have participated in the bidding that followed the revocation of the license, having being involved with Malabu in seismic surveys of the same block.

The committee said it was wrong to revoke the license particularly after Malabu had extracted assurances from the DPR in 2000 and 2001 "that OPL 245 was not affected by the revocation of oil blocks by the Federal Government," describing the move as "highly embarrassing."

The committee observed further: "The circumstances and seeming secrecy with which the revocation was made and re-awarded to Shell are not in conformity with the policy of the present Federal Government on accountability, transparency and the participation of indigenous companies in the upstream (sector) of the oil industry."

The committee asked the Federal Government to "revoke forthwith the license to operate OPL 245 it granted to Shell as the award was made in very murky circumstances," more so "as the agreed signature bonus fee of $210 million has not up till date been paid to government by Shell."

The committee reprimanded Shell for seeking "refuge" in the courts instead of appearing before it to state its own side, adding that the refusal of the SPDC managing director, Dr. Ron Van Der Berg, to appear before it "is indicative that he may not have played a noble role in the events that led to the revocation of OPL 245."