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A D V E R T O R I A L THIS IS A BULLETIN OF FACT: The $210 million signature bonus paid for OPL 245 is the highest in Nigeria’s history. THESHIFTSOCIETY INSIGHTS IN TRANSPARENCY What you need to know about the OPL 245 saga Recently, an Italian court ruled that the executives of Shell and Eni THE 2011 SETTLEMENT should go on trial over allegations AGREEMENT WITH of bribery in the OPL 245 purchase MALABU OIL & GAS LTD from Nigeria’s Malabu Oil & Gas Ltd in 2011. How much do Malabu waives all interests and rights in OPL 245 and agrees that it should be Nigerians know about the nitty- re-allocated to another entity. gritty of the scandal? THE SHIFT SNUD agrees that its interest be re- SOCIETY, a Nigerian civil group allocated to SNEPCo, who will re-imburse promoting transparency and SNUD all costs incurred so far and human rights, offers a bird’s eye $335,600,000 incurred by SNUD under view on the history, issues and the PSC with NNPC in 2003. dramatis personae in probably the FGN will now re-allocate OPL 245 to GEN. ABACHA awarded OPL 245 to Malabu in PRESIDENT OBASANJO revoked licence in 2001 PRESIDENT YAR’ADUA set up another committee to PRESIDENT JONATHAN finally implemented the SNEPCo and Eni (known in Nigeria as the most problematic deal in the 1998 under discretionary allocation to indigenous and awarded it to Shell, Malabu’s partners. resolve the dispute with Malabu but the agreement in 2010, returned the block to Malabu Nigerian Agip Exploration, NAE). history of the country’s oil industry companies. It was later discovered his son and oil Litigations ensued. His government finally reached an recommendations were not implemented as he fell and approved resale to Shell/Eni in 2011. Accused minister owned shares in Malabu out-of-court settlement with Malabu in 2006 terminally ill. He died in May 2010 of collecting bribe but strongly denies The fresh OPL will be for 10 years and when oil production starts, it will be converted to an oil mining lease (OML) n April 1998, the government of Gen. an agreement for the block and Malabu Government to return the licence to the then Attorney-General, reportedly allegedly decided to pay directly to FGN What happened to OPL 245? With the re-allocation, Shell will pay a Sani Abacha awarded an Oil was to transfer 40% interest to SNUD. Malabu. The government refused, following advised Jonathan to honour the agreement for onward disbursement. That is the reason All is fine. Oil and gas discoveries had signature bonus to FGN as determined in IProspecting Licence (OPL) to Malabu Oil Along the line, Abacha died. In 2001, the which Malabu headed for court. It lost but so that progress could be made on the for the indictment of the oil executives. been made in Etan and Zabazaba fields in the Resolution Agreement. new President, Chief Olusegun Obasanjo, went on appeal. potentially lucrative oil block. In 2011, Officially, Eni/Shell insist they paid $1.3bn & Gas Ltd for Block 245. The owners of 2005 and 2006 respectively. Eni continues The re-allocation of OPL 245 will revoked the licence and invited Shell to bid Malabu decided to sell the block but was to FGN, and not Malabu, for OPL 245. Malabu were listed as Kweku Amafagha, Eventually, the Federal Government prospecting. It recently awarded a effectively terminate the 2003 PSC for it. Shell got it and went into a no longer ready to discuss with Shell Mohammed Sani and Hassan Hindu. buckled and agreed to settle out of court. Any other thing we need to know? $5.42bn contract to Italian engineering, between SNUD and NNPC, and the production sharing agreement with the because of “betrayal”. Eni of Italy, which Premium Times, an award-winning It was agreed that OPL 245 should be Etete had been convicted of money construction and drilling contractor, Saipem, $207,960,000 deposited in an Escrow Nigerian National Petroleum Corporation already owns the contiguous OPL 244, investigative website, would later reveal returned to Malabu. However, Shell kicked laundering in France in an unrelated deal, for chartering, operations and maintenance account by SDPC will be paid to FGN as (NNPC). stepped in. After negotiations, a price of that Chief Dan Etete, the Minister of and filed an arbitration case against but his involvement in OPL 245 transaction for a Floating Production Storage signature bonus for the re-allocation of $1.1bn was agreed with Malabu by Petroleum under Abacha, was the “Kweku”, Shell agreed to pay the signature bonus Nigeria at the International Centre for the raised the eyebrows of observers who then Offloading tanker. Production is expected OPL 245 to SNEPCo and NAE. Mohammed Abacha, son of the former Eni/Shell. And the deal was done. Eni/Shell of $210m — the biggest ever in Nigeria's Settlement of International Disputes (ICSID), went to search for possible wrongdoing. to start in 2020. Head of State, was the “Mohammed Sani”, history. The oil company paid $1m of the an organ of the World Bank, claiming at paid a total of $1.3bn ($1.1bn to Malabu An Escrow account will be opened in the and Hassan Hindu was the wife of Alhaji amount to the Federal Government and least $1.5 billion from Nigeria for alleged to buy the block, and $210m as “signature names of FGN and Malabu at JP Hassan Adamu, who was then Nigeria's paid the balance of $209m into an escrow breach of contract. When Obasanjo's bonus” to the Federal Government). Morgan. Ambassador to the US. account, jointly operated by it and the successor, Alhaji Umaru Musa Yar'Adua, So where was the scandal? Was $1.1bn actually diverted? NAE will pay an agreed sum to the account — the bulk to be transferred by Malabu made an advance payment of Federal Government. This was in apparent came to power in 2007, he set up an Rather than pay directly to Malabu, Most commentators on the payment of $1.1bn to Malabu by Shell/Eni in the OPL 245 deal use FGN to Malabu as its pay-off for giving $2m on the concessionary $20m signature anticipation of litigation by Malabu over interministerial committee headed by Chief Shell/Eni paid to the JP Morgan account of the word “diversion” - suggesting that the money belongs to the Nigerian government. up OPL 245 and a fraction as additional bonus for the block. Meanwhile, Malabu the revocation. Michael Aondoakaa, his Attorney-General, a third party, FGN, who then transferred Infographics have been used to depict how the money could have gone into social services, such bonus to FGN. and Shell Nigeria Ultra Deep Limited The House of Representatives held a to look into it. The committee’s part of the payment to Malabu. Global as health and education. As plausible as this sounds, it is not exactly correct. Yet this notion still (SNUD), a special vehicle of Shell, signed public hearing and asked the Federal recommendations were not implemented as Witness and Finance Uncovered, anti- generates the most public anger about the deal. Having allocated OPL 245 to Malabu and Deal concluded, NAE and SNEPCo will Yar’Adua battled ill-health for most of his corruption organisations based in the UK, collected $210m signature bonus, the Federal Government no longer had a stake in the block. execute the PSC for OPL 245. tenure. He died in May 2010. But government would still make money in taxes, royalties and levies when oil production All pending suits, and arbitration, will be would later reveal that leaked emails from starts. Gen. Danjuma’s Sapetro sold 45% of OPL 246 to CNOOC of China for $1.7bn and withdrawn by all parties. When Dr. Goodluck Jonathan assumed the executives of Shell and Eni suggested nobody said the Federal Government lost $1.7bn or that the proceeds should have gone into Who got what oil block? office, Malabu brought up the 2006 they knew that bribes were going to be social services. For example, if you buy a plot of land from government for N1m and resell it for agreement, also called “consent paid from the deal. To avoid the bribes N3m, the profit is yours. Government could still make money from the land use charge, property judgement”. Mr. Mohammed Bello Adoke, being traced to them, Shell and Eni tax and other levies. The curious case against Mohammed Adoke uriously, of all the government officials involved However, only Adoke is being accused of giving prosecuted by the EFCC place in 2011. Please in the settlement of the OPL 245 dispute in “wrong” advice to government, authorising the that the $2.2m allegedly traced to him (Adoke) was in does that make sense?” 2011, only Mr. Mohammed Bello Adoke, the “diversion” of $801m to Malabu from the JP Morgan an unrelated mortgage he took from Unity Bank to buy Adoke insists that he carried out lawful directives issued Cthen Attorney-General, is being prosecuted by account, and collecting a bribe of $2.2m. In various press a N500m house in Abuja from one Alhaji Aliyu to him by Jonathan on the OPL 245 transaction and that the EFCC. Others who signed the Resolution Agreement statements, paid advertisements and media interviews, Abubakar, a property developer. According to Adoke, he is only being victimised by a coalition of those who OPL 216 OPL 246 OPL 245 on behalf of the government were Mr. Olusegun Aganga, Adoke has vigorously denied all these allegations, stating the bank loaned him N300m (which it paid directly to lost out in the deal and those who thought he must have Mrs Folorunsho Alakija’s Gen.

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