OML 11: Shell dares FG at Supreme Court

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Sopuruchi Onwuka

Shell Petroleum Development Company (SPDC) Nigeria Limited is pressing ahead with contest over operating right on the Oil Mining Lease (OML) 11 onshore Niger Delta, brushing aside advice by the Nigerian National Petroleum Corporation (NNPC) to cease fighting.

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According to Africa Oil + Gas report, Shell says it would challenge the decision of the Appeal Court which ruled in Abuja that the Minister of Petroleum Resources holds the discretion to grant renewal of operating licences over Nigeria’s petroleum assets.

The decision of the Appeal Court nullified earlier High Court ruling which declared that Shell is entitled to license renewal on OML 11.

The Oracle Today reports that Shell had operated OML 11 with a 25.6 percent interest under a joint venture in which the Nigerian National Petroleum Corporation (NNPC) holds overriding 55 percent stake. Other partners in the JV are TotalEnergies and Eni’s Agip.

Group Managing Director of NNPC, Mallam Mele Kyari

However, asset development and production operations at OML 11 had frozen for decades over Shell’s bickering with host communities over environmental issues. The hostile relationship between Shell and its host communities had led to widespread restiveness and eventual sabotage of oil installations in the Niger Delta.

Shell’s enmity with OML 11 community is ancient and deep seated, making eventual return of the company to peaceful operations in the area most unlikely.

Following a range of issues that include hostile relationship with host communities, deep seated pollution in the operating environment, security tension arising from enmity with communities, resulting protracted downtime and asset depreciation, Shell was not able to renew its license to continue operating OML 11.

The first leg of the consequent legal tussle for regain of operating license on the lease area ended in favour of Shell at the High Court, but an appellate court nullified the victory and handed NNPC operating right on the oil block.

Government sources say that mismanagement of relationship with host communities might have informed the decision of the petroleum minister to withhold approval for renewal of the company’s right to continue operating the field.

Instead the minister transferred the operating right on the oil block to NNPC whose Nigerian Petroleum Development Company (NPDC) is now assigned to re-enter the oil block for rapid monetization with the energy transition window.

Group Managing Director of NNPC, Mallam Mele Kyari,stated that the NPDC would pursue promotion of clean energy through its gas production with prospects of gas-to-power initiatives to “light up opportunities in the region,” and provide the much deserved industrialization.

He also stated that environment would be a top priority for NPDC’s operations, as well as implementation of a robust host community engagement strategy to address Shell’s hostility legacies, while agreeing to a transparent engagement model going forward.

The corporation warned Shell against any further legal challenge, stressing that it was about time Nigeria derived the benefit of the OML11 after over three decades dormancy under Shell’s stewardship.   

“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 judgment 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,” Mallam Kyari said.

The corporation hailed the recent appeal court judgment as a huge victory for Nigeria and the beginning of addressing decades of host community restiveness.  

It would be recalled that appeal court sitting in Abuja had on Monday upturned the August 23, 2019 ruling of the Federal High Court, Abuja which held that the Shell Petroleum Development Company was entitled to the renewal of the Lease on OML 11. 

In the ruling, the appellate court held that the Minister of Petroleum Resources has the discretion whether or not to renew the OML 11 Lease in favor of SPDC. The Court further 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).

Mallam Mele Kyari said 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.

According to him, 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,” Mallam Kyari stated.

The Oracle Today reports that crude oil accounting allegations; clashes with host Niger Delta people; indictment on poor environmental practices; and media campaigns are legendary in the narratives of Shell’s operations in Nigeria.

Conflicts with community, government and business partners have made Shell a popular figure in courts and arbitration centers across the globe; including cases and investigations of corrupt asset acquisition and indictments on massive environmental pollution in the Niger Delta.

Litigations against Shell’s operational misdeeds and mistreatment of its host community leaders spread from courts in Nigeria to United States and Europe. The Aglo-Ducth multinational continues to lose and win some of the determined cases. A lot of appellate reviews still run on some of the cases.

The prevailing legal tussle with government over OML 11 add to Shell’s case mongering reputation and hostility with its stakeholders from community, state and federal levels.

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