OML 130: Court Declines to Halt Indigenous Oil Firm’s Case against NUIMS, TotalEnergies

Emmanuel Addeh in Abuja

Justice Rasul Olukolu of the Lagos High Court, has declined to halt a suit instituted by an indigenous oil firm, Palmeron Nigeria Limited, against a Nigerian National Petroleum Company Limited subsidiary, the NNPC Upstream Investment Management Services (NUIMS) and TotalEnergies.

NUIMS and TotalEnergies had prayed the court for an order declining to exercise jurisdiction in the suit and an order striking out or staying further proceedings in the Palmeron case pending the exhaustion of the arbitration process for Oil Mining Lease (OML) 130.

The ongoing dispute is over a rig contract for which the local Nigerian company, Palmeron, complains that it offered the Deep Value Driller at a lower price during a tender, but was rigged out of the process without explanation.

THISDAY learnt that Total operates the block, which holds the Akpo and Egina fields. The energy company intended to carry out infill drilling on Egina this year, possibly anytime from the second quarter.

The NNPC subsidiary and TotalEnergies had hoped  the matter will be taken to arbitration, in court papers obtained, but  an interim injunction granted by the court now means the company must wait for a court hearing on March 1.

According to Palmeron, the company had expressed interest after TotalEnergies published the first tender. But to its chagrin, Palmeron insisted that the French oil company then called off the tender process after much progress had been made and a lot of expenditure had been made without the company giving any reason.

The “tender process was called off without giving any reasons,”  the firm told the court, with  the contract later awarded to a consortium of Tirex Petroleum, Pidwal and Noble.

Palmeron is raising posers about the way in which TotalEnergies awarded the work and has expressed reservation over the role played by NUIMS, the NNPC subsidiary that ‘oversees’ the upstream on behalf of the national oil company.

Although the 2nd Defendant (NUIMS) did not file any process in reaction to the suit and the instant application, but court papers showed that it informed the court in plenary that it would be aligning with the 1st Defendant’s application.

NUIMS and TotalEnergies argued before the judge that the Claimant expressed its consent to the procedure and conditions of the tender by endorsing the tender documents, and that article 8 of the Specimen Contract, forming part of the tender documents, laid down a procedure for the settlement of disputes between the parties.

They contended that the Claimant had not initiated an arbitration following the parties’ inability to reach an amicable settlement which it ought to have done before approaching the court.

But in opposition to the instant application, Palmeron argued that the Defendants have not shown before the court that they accepted the Tender or that there is a formal agreement between the parties and therefore could not get the reliefs sought.

It argued that the court has the requisite jurisdiction to entertain the suit because the condition precedent to the parties submitting to arbitration, which is execution of a formal agreement, had not been met.

 “Having critically examined the affidavit evidence filed by both parties…the questions to be posed then are — Is there a contract yet between the parties upon which an arbitration clause can be activated? Can the Specimen Contract (exhibit ‘B’) ground a contract between the parties?

“Can the reference to the dispute settlement procedure in the Specimen Contract be said to be within the contemplation and intention of both parties? Does the Applicant comply with the conditions precedent for a stay of proceedings pending arbitration?

“Does the said Clause 8 of the Specimen Contract make a good arbitration clause under the law? The consideration of the circumstances of this case and the law on the subject will, I am sorry, allow this court to answer all of the foregoing questions in the negative,” the judge ruled.

In answering the posers, the court said it had the jurisdiction to hear the case, telling both NUIMS and Palmeron that it would exercise it in that manner.

“In view of the above reasons, it suffices only to state here, that this court’s jurisdiction is very well activated by the Claimant/Respondent in this suit and this court shall so exercise same in the hearing of this suit.

“In the light of the foregoing, therefore, I will, resolve the sole issue distilled above for determination in favour of the Claimant/Respondent herein, and order that this application be and is hereby dismissed,” it stated.

Meanwhile, Palmeron’s lawyers have faulted the insistence of the defendants on proceeding with the provision of the drillship rig for OML 130 despite the fact that their application for Interlocutory Injunction has been adjourned for arguments.

“Our client’s representatives informed us that despite the fact that the court assumed jurisdiction in the matter and refused to refer the matter to arbitration, you directed that the drillship rig be moved to OML 130 and commence operations on the 28th January, 2023.  Your conduct is contemptuous and you will be solely responsible for your action,” it wrote in the letter.