Nigeria OML 11: The Litigation and Acquisition of the prolific oil well

The legal battle between The Nigeria National Petroleum Corporation (NNPC) and Shell Nigeria – the later quest to regain the operator of Oil Mining Licence (OML) 11 is far yet to be over. The recent Appeal court judgment on the prolific oil well was never palatable to Nigeria exploration and production giant. But reverse is the case for the Nigeria National Petroleum Corporation (NNPC) who subsequently has hailed the recent Appeal Court judgment affirming its ownership of the Oil Mining License 11 (OML 11), describing it as a huge victory for Nigeria and the beginning of moves to address decades of restiveness in the host community.

The recent Appeal Court judgment sitting in Abuja had upturned the August 23, 2019 ruling of the Federal High Court, Abuja which previously upheld the Shell Petroleum Development Company (SPDC) sole right to renew the expired mining lease on OML 11 that contains 33 oil and gas fields and situated in Ogoniland, Rivers State, the South-eastern Niger. According to the Appellate Court, the ruling held that the Nigerian minister of petroleum resources “has the discretion whether or not to renew the OML 11 Lease in favour of SPDC.”

President Muhammadu Buhari has in 2019 ordered the NNPC, through the NPDC to take over the operatorship of the asset from SPDC and sequel to this order was a letter signed by then late Chief of Staff to the President, Abba Kyari, urged the national oil company to take charge not later than April 30, 2019 which was subsequently implemented by the minister of petroleum.

One of the matters brought before the appellate court was that if the Nigeria Minister of petroleum has the optional power to reward the expired oil mining licence to another operator. But in its ruling, The Court held that the Minister rightly exercised his discretion in awarding the OML 11 Lease to NPDC, a subsidiary of the Nigeria National Petroleum Corporation (NNPC).

In response to this milestone judgment, According to media statement released by the Group General Manager, Group Public Affairs Division of the NNPC, Garba Deen Muhammad, on behalf of the NNPC Group Managing Director, Mallam Mele Kyari: “the ruling has paved the way for the NPDC to lead a formidable OML 11 team towards bolstering productivity in a responsible, efficient, environmentally friendly, and sustainable manner.”

 “Accordingly, resumption of operations on OML 11 will demonstrate the NPDC’s full commitment to develop and add value to its communities and the nation as a whole.

“We now have an opportunity to reconstruct a new beginning on OML 11, driven by global best practices and a social contract that would put the people and environment of the Niger Delta above pecuniary considerations.

“This is a huge victory for the government and people of Nigeria as we now have the impetus to responsibly unlock the oil and gas reserves the block offers for the benefit of all Nigerians.”

 “will pursue promotion of clean energy via its gas production with prospects of gas-to-power initiatives to light up opportunities in the region,” The NNPC GMD stated.

Further in his media release, the NNPC GMD re-affirmed the corporation commitment in taking the environmental activities of its operations in the host community paramount as further degradation of the area owing to oil pollution should no longer be entertained and the community social responsibility of the host should not be tampered with as the transparency and strategic engagement with the host should be the NPDC watchword.

 “It is time to roll back the decades of despair and destruction with the emphatic Appeal Court ruling. It is time to unlock opportunities for economic development in the region.

“In the light of their inability to work on the Ogoni region of the block for over 30 years and the new beginning this judgement presents, further legal action by Shell will not only be futile, it would be depriving Nigeria of an opportunity to make meaningful gains from OML 11 when the nation needs all the revenue it can get to move Nigeria forward,” the GMD said.

Though, a Joint Venture (JV), Shell inability to produce oil from the prolific oilfield decades ago was owing to unresolved communal issues with the ogonis-the host community. The lingering of these unresolved differences between Shell and Ogonis which was attributed to wanton neglect of the company’s CRS to the host community and non remediation of the oil polluted farmland eventually culminated down to the expiration period of the OML 11. These decades of abandonment have brought untoward colossal revenue loss to shell and host community has vehemently refused Shell from reentry to this juicy oilfield.

The NNPC has further called for caution against any further legal challenge by the SPDC, stressing that it was about time Nigeria and the host community in particular should derived the benefit of the OML11 after over three decades.

Despite all indications point towards insinuations that Shell might contest the appellate court judgment to Supreme Court according to perceived feelers available in the public domain; The NNPC has further called for caution against any further legal challenge by the SPDC, stressing the fact that it’s high time Nigeria and the host community in particular should derived the benefit that should accrue from OML11 after over three decades of abandonment.

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