Court Issues Contempt Notice against Kachikwu over OML 13

• Baru allegedly shuns AGF, oil minister to mislead Buhari
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A Federal High Court sitting in Abuja presided over by Justice John Terhemba Tsoho has issued notice of consequences of disobedience to order of court to the Minister of State for Petroleum, Dr. Ibe Kachikwu, over revocation of three oil blocks in Oil Mining Lease (OML) 13 by President Muhammadu Buhari, who acted in his capacity as the Minister of Petroleum.

The contempt notice against Kachikwu in suit No. FHC/ABJ/CS/21/2017, signed by the Court Registrar, Mr. Felix Udofia, was at the instance of Hi Rev Exploration and Production Limited, one of the three companies that won the blocks in the 2007 oil licensing rounds.
The Attorney General of the Federation (AGF) and Minister of Justice, Mr. Abubakar Malami (SAN), was also joined as a co-defendant in the suit where Justice Tsoho had ordered the parties to maintain status quo and followed it up with the notice of consequences of disobedience to order of court.

The winners of the oil blocks alleged that the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Kacchala Baru, and the Managing Director of Nigerian Petroleum Development Company (NPDC), Yusuf Matashi, misled President Buhari to revoke the oil blocks without putting Malami and Kachikwu in the picture.

 In a memo routed direct to President Buhari and dated December 20, 2016, which was obtained by THISDAY, Baru acknowledged that Oil Prospecting Leases (OPLs) 2001, 2002 and 2003 in OML 13, which were recovered from Shell by the administration of former President Chief Olusegun Obasanjo, were “inadvertently revoked” by Obasanjo’s administration and “back-converted to greenfield OPL and resized into OPLs 2001, 2002 and 2003 and offered under the 2007 Licensing Round.”
However, the winners of the blocks argued that Maikanti’s letter, which insisted that the OPLs belong to NPDC, did not disclose that NPDC also submitted a bid for one of the blocks in the 2007 open licensing round but lost as a result of low bid.

THISDAY gathered that SPDC had operated the three blocks until 1995 when Ken Saro-Wiwa was hanged by the military regime of the late Gen. Sani Abacha.
Following the execution of Saro-Wiwa, the Ogoni people, who had sacked Shell from their area since 1993, also denied the oil giant access to the oil blocks, which are located in the neighbouring Iko Community in Eastern Obolo Local Government Area of Akwa Ibom State.
With this development, THISDAY gathered that the only access Shell had to Eastern Obolo was a long journey through Port Harcourt, Aba, Ikot Ekpene and Eket.

 This led to the shut-in of the fields until 2007 oil bid round, where Jahcon International Ltd won OPL 2001, while Oil and Industrial Services Ltd won OPL 2003, with commitments to pay signature bonuses of $ 46 million and $34 million, respectively.
OPL 2002 was won by Hi Rev Exploration and Production with a commitment to pay $66 million as signature bonus.
But Shell went to court on the day of the licensing round and obtained injunction to stop the transfer of the assets to the winners.

The case dragged till 2015 when all the parties reached an agreement to settle out of court, which formed the judgment of the Federal High Court.
Consequently, Jahcon International and Oil and Industrial Services Ltd made payments for signature bonuses of $46 million and $34 million in accordance with the agreement with the federal government, which was adopted as the consent judgment of the Federal High Court in the suit No. FHC/ABJ/CS/282/2007.

 However, on December 20, 2016, Baru wrote a memo routed direct to the President requesting that the awards be revoked, and all three bocks merged and renamed OML 13 as in pre-2007 era and the OPLs given to the NPDC by executive fiat.
Citing documents available to THISDAY, the winners of the blocks alleged that Baru forwarded the request direct to the president without seeking legal advice from the Ministry of Justice, or consulting the Minister of State for Petroleum.
In the letter, Baru reminded President Buhari that “First Schedule of the Petroleum Act, Section 25 grants the minister, the power to revoke any licence or lease based on the minister’s opinion of performance on the license or based on non-compliance with the Petroleum Act.”

Baru added that “the inadvertent back conversion of OML 13 contravenes the principle of classification of OPLs and OMLs under the First Schedule of the Petroleum Act as the lease area met all requirements for conversion to an OML and already achieved a commercial production of 33,500 barrels of oil equivalent per day (bopd), which is above the stipulated 10,000 bopd.”

The NNPC boss also requested the president to grant approval for NPDC to bear “the refund to the offerees of OPLs 2001 and 2003 for the sums of $46 million and $34 million, respectively, and thus absolves DPR of such refund obligation.”
Following the President’s approval, also dated the same December 20, 2016, the Director of DPR, Mr. Mordecai Dantani Ladan wrote two letters, dated February 15, 2017, informing Jahcon International Ltd and Oil and Industrial Services Ltd of the revocations of the acreages, citing “a review of the reconversion process of the former OML 13 to OPLs 2001, 2002 and 2003”.

 THISDAY gathered that even before the President granted the approval to revoke the blocks, Ladan had in a letter with reference number PI.LM/3900/S.V.1/234 of October 6, 2016, informed the Managing Director of Hi Rev Exploration & Production Limited of the revocation of OPL 2002, citing the company’s failure to pay $33 million, representing 50 per cent of signature bonus within 90 days from June 1, 2015 when the settlement agreement was reached.
The revocation prompted Hi Rev Exploration to seek legal action against Kachikwu as the President, who doubles as the Minister of Petroleum enjoys immunity.