From the initial allocation in 1998 until 2011, the OPL 245 exploration block has been the subject of a number of legal disputes and international arbitration involving the Nigerian government, Shell, NNPC (the Nigerian State Owned Company) and the company Malabu, resulting from the claims of these companies regarding the rights to the block and certain other contractual claims following its allocation. Eni was not party to these disputes.
During 2010, Eni had rounds of negotiations with Malabu and Shell for the potential acquisition of a stake in the block. Such negotiations were under customary rules and subject to all pre-existing disputes on the block ongoing since 2001 been fully and finally settled.
Malabu rejected the valuation proposed by Eni and Shell and the deal broke.
The Nigerian government, given the huge losses already suffered on the delay on putting the block into production, called Shell (that had already significantly invested hundreds of millions of Dollars in exploration activities in the block) with Malabu (that held full participation rights to the block) and Eni (holder of rights to a contiguous block – OPL 244 - on which it had made studies and begun work) with a view to identify a possible solution to facilitate the block development.
It was obvious to all parties involved that any solution had the pre-requisite to settle any and all existing claim to make a disputed asset capable of being developed.
The Government of Nigeria agreed to become the contracting party to Eni and committed to deliver to Eni and Shell the rights in OPL 245.
In order to do so, the Government of Nigeria had separately structured to settle with Malabu and all other parties concerned the pre-existing claims to clear the asset to be delivered free.
The transaction between Eni, Shell and the government closed in May 2011.
The agreements were signed by Eni exclusively with Shell and the Nigerian government.
The government was represented by three different ministers: Oil, Finance and Justice.
At the same time, the Nigerian government concluded separate settlements with Shell, Malabu and NNPC (the state Oil Nigerian Company), for the pending disputes, the definition of which was a necessary prerequisite to the assignment of rights committed to Shell and Eni.
The payments made by Eni and Shell to the Nigerian government for the new OPL 245 licence were made to an escrow account with one of the five biggest international bank held by the government itself.
It was the prerogative, right and at the discretion of the Nigerian government to decide how to resolve the dispute between Shell and Malabu and how to use the price received from Eni and Shell under the Agreement.
Following a complaint by Italian and foreign NGOs regarding alleged corruption concerning the OPL 245 transaction, in 2014, Eni was informed that a preliminary investigation had been initiated by Milan prosecutors.
As soon as Eni became aware of the investigation, it began a wide-ranging investigation of its own, conducted by an independent third-party, to determine the correctness and regularity of the procedure for the acquisition of the block.
The third-party consultants who carried out the investigation were selected independently by the Board of Statutory Auditors and the company’s Supervisory Board; an experienced US law firm in the field of anti-corruption (Pepper Hamilton) and an American company specialized in forensic analysis (the Freeh Group, whose founder and owner is a former head of the FBI). These companies had never previously worked as consultants for Eni or Eni Group companies.
The independent investigation, which was concluded in March 2015, confirmed the procedure for the acquisition of OPL 245 and found no credible evidence of the involvement of Eni staff in corrupt activities with Nigerian government officials, nor any knowledge of the actual existence of such activities by third parties in connection with the transaction.
Eni’s Board of Directors also appointed another independent US law firm to assess initiatives taken by the company to ensure that internal audits and management methods were appropriate and in line with international best practices. This study confirmed the effectiveness of such efforts and that of the management.
On 22 December 2016, the Milan prosecutor’s office gave notice that the investigation had been closed and filed the relevant documentation.
Further subsequent checks were made by Pepper Hamilton also including an examination of the documents filed with the Milan prosecutors the conclusions already reached in 2015, underlining that no evidence was found of any form of corruption with regard to the transaction, were confirmed.
Additional reviews have been committed to outside counsels/advisors confirming the price fair, the transaction process and structure correct and in compliance with applicable Nigerian legislation. No breaches of anti-corruption or money laundering applicable laws or otherwise deviations from best practices in the sector.
The preliminary hearing will start on 20 April 2017.
On 26 January 2017, the Nigerian Federal High Court ordered the temporary seizure of OPL 245 and also ordered that the licence be temporarily managed by the Department of Petroleum Resources, on behalf of the Nigerian government, pending the conclusion of the ongoing investigation in the country regarding the award of the licence to the Eni/Shell consortium.
The order was issued at the request of the Nigerian Economic and Financial Crimes Commission, without any discussion with the interested parties. Moreover, the measure does not address the merits of the case.
On 31 January 2017, Eni and Shell lodged an appeal to the Nigerian Federal High Court for the annulment of the seizure order, which both companies consider illegitimate.
Indeed, the seizure initiative in Nigeria is also a surprising development given that the Nigerian authorities, most recently the Nigerian Minister of Petroleum during a visit to Rome on 23 January, confirmed – also formally - the continuation of development activities at OPL 245.
Eni is also examining its options under the terms of international treaties for the protection of investments.
The Federal High Court in Abuja, Nigeria, upheld the appeal made by NAE, the Eni subsidiary that operates in Nigeria, and SNEPCO, a subsidiary of Shell, aimed at overturning the temporary seizure of the OPL 245 licence, ordered by the court on 26 January at the request of the Nigerian Economic and Financial Crimes Commission. As a result of the decision by the court, NAE and SNEPCO is once again in full possession of the rights regarding OPL 245, of which they are joint (50-50) owners.
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