OML 11 saga: Shell’s loss of 45% in 250,000bpd field, as Rivers State pounces with $150m

By Ben Eguzozie, in Port Harcourt

Royal Anglo Durch oil giant, Shell, has finally lost 45 percent of its stake in Ogoni OML 11, a 250,000 bpd oil field, as Rivers State governor, NyesomWike announced Monday that the state government has fully acquired the company’s oil deposit situated in EjamaEbubu community in Eleme Local Government Area and the adjoining Ogoni and other communities of the state.

“I am delighted to inform you that the Rivers State Government has fully acquired Shell Petroleum Development Company of Nigeria (SPDC) 45% interest in Oil Mining Lease (OML) 11 situated in EjamaEbubu community in Eleme Local Government Area and the adjoining Ogoni and other communities of Rivers State,” said Governor Wike in a state broadcast.

He titled his speech: “We will continue to advance the state’s interest, security, and prosperity of all,” saying that his administration will always advance the best interest of Rivers State.

The background to acquisition of OML 11, a 250,000 barrels per day field, equalling one-sixth of Nigeria’s total oil output is premised on court judgements in the United Kingdom and Nigeria for enforcement, began in 2001. The matter followed a 1970 major oil spill from SPDC’s Trans Niger high pressure crude oil pipeline at Ejama Community, devastating an approximate area of 255 hectares of arable agricultural land, fishing swamps and rivers. SPDC had admitted that the oil spill came from their pipeline and occurred sometime in 1970. They paid N300,000 compensation to the community in 1986, promising to de-pollute the area, which it failed to do. By 1991 the community opened a lawsuit at the High Court of Rivers State,Nchia Division presided over by P.N.C. Agumagu (now retired). At the end of the trial, the court found against SPDC and entered judgment in the sum of N1 billion in addition to an order for SPDC to clean up the spill or pay N6 billion in lieu thereof. Shell appealed the judgement. During the pendency of the appeal, the jurisdiction of the State High Court was taken away and donated to the Federal High Court by a subsequent judgment of the Supreme Court. The EjamaEbubu Community conceded SPDC’s appeal without a formal hearing. The community brought a fresh case against the oil company. The matter passed through four different justices, arising from twists and turns associated with opposed litigations, until it was disposed of about 10 years after in June 2010 by Buba J. (the fifth judge to preside over the matter).

SPDC and its parent companies appealed the judgment at the Court of Appeal in 2010, which again suffered twists and turns, passing through six different panels comprising three justices each between 2010 and 2017, before it was finally disposed of by the panel of that court led by Gumel JCA of the Port Harcourt Division. The appeal was dismissed.

Shell and its parent companies took out a further appeal to the Supreme Court of Nigeria in 2017, which appeal was considered and dismissed by the apex court in a judgment read by B. Akaahs, JSC, delivering a lead judgment in a unanimous decision.

After losing at the High Court, Shell gave the EjamaEbubu plaintiffs a bond guarantee stipulating that First Bank of Nigerian would pay them the value of the judgment debt and interests thereon in the event that its (SPDC) appeal to the Court of Appeal fails. The original bank guarantee is still with the community.

When SPDC’s appeal failed at the Court of Appeal, the Anglo Dutch oil giant went up to Supreme Court, instructing First Bank to dishonour their guarantee, on the excuse that it had lodged an appeal at the apex court. All this gave rise to a series of six different litigations in various courts against First Bank and the Central Bank of Nigeria (CBN).

The enforcement cases had been to Owerri, Abuja and Lagos in six different lawsuits. On the 11 January 2019, Shell’s appeal was dismissed at the Supreme Court of Nigeria.

The judgments of the High Court, the Court of Appeal and the Supreme Court were registered in the UK for enforcement against SPDC parent companies domiciled outside Nigeria’s shores.

On the enforcement of the judgments in Nigeria, Governor Wike said: “The EjamaEbubu community commenced enforcement by domiciling the judgment in the State High Court and levying execution on SPDC movables in their Industrial Area (IA) in Port Harcourt: the chattels were attached on the ground but not removed; SPDC invited the community and offered them N7 billion against the judgment debt of N194 billion, which the community refused to accept; the community approached the court for an order granting them leave to sell SPDC’s immovable property comprised in OML 11 and their Kidney Island support base in Port Harcourt.”

Governor Wike said upon the advertisement of the said immovable assets for auction, the Attorney General and Commissioner for Justice of Rivers State alerted the state government.

He explained the reasons for the state government’s resolve to purchase OML 11 to include: that the impact is still there and un-remedied since 1970 as admitted by SPDC vide letters they wrote seeking to clean the spill in 2006 while the case was at the trial court; that the state has suffered the worst impact of environmental degradation resulting from oil related operations; that the very difficult swamp and mischievous waterlogged terrain of Rivers State has impeded development as a result of increased construction costs on the near and non-existent infrastructures, and attendant rapid decay of the little we have been able to achieve as a result of oil related acid rain and sooth enveloping the state; that these phenomenal degradation and impoverishment had continued with the decline of revenue and inflation, lack of employment of well-educated Rivers youths, idleness and restiveness arising from want; that SPDC is said to have paid US$ 2 million for the renewal of their operatorship and interest in OML 11 to the Federal Ministry of Petroleum Resources; that for the past 25 years, the rich oil potentials of OML 11 have remained untapped following the hanging of Ken SaroWiwa and the Ogoni 9, as well as the unfortunate mob-lynching of four prominent Ogoni citizens, one of whom was the Secretary of Government of the Rivers State, another a Commissioner under the tenure of Dauda Musa Komo, as military governor of Rivers State.

That it has become unlikely, for peace and security, that the people of Ogoni people in Rivers will welcome SPDC on their land forming part of OML 11; that a lot of revenue is lost to the Federation Account accruable to the 55% stake of the Federal Government in OML 11, and by extension the rest of the federating states of Nigeria due to non-production of nearly 250,000 barrels per day of its crude oil potentials equalling one sixth of the country’s total output; that the Rivers State Government has continued to lose 13% derivation fund from the said 55% stake of the Federal Government in the field for nearly 30 years, which revenue would have transformed the State and its peoples for the better.

Other reasons for acquisition are: that rather than standby and watch other persons or group purchase SPDC 45% interest in OML 11, and further exacerbate the poverty of the people of the state, a responsible and responsive state government should weigh in and bid for the purchase of SPDC interest already set down for auction; that the present Government of Rivers State entrusted in my care through the Will of God and those of the people of the state, have concluded that it will be in the overall interest of the state, the other federating states and the Federal Government that we as a government should make a bid for the purchase of the said interest of SPDC now placed on auction by extant order of the courts of law.

Governor Wike said he has directed the Rivers ministry of Finance to make a bid of US$150 million supported by a bank guarantee and cash payment to the deputy Sheriff in the sum of N1 billion, then later payable to the judgement creditors while the former is escrowed.

“I have further directed the relevant government agencies to take immediate steps to liaise with any financially capable companies to partner with the Rivers State government to ensure that the said oilfield come on stream within 15 months from today,” he said.

He said, in line with its commitment to accelerate development, industrial harmony and security, Rivers will graciously concede some portion of its 45 percent equity interest to all the oil producing communities within OML 11 to enhance mutual ownership, participation and sharing in the benefits of the resources.

Wike said he took the steps with all sense of responsibility, believing that addressing the pains and poverty of the people, with the resultant security and welfare of the people, is the main purpose of governance and nothing less.