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Court voids Yar’Adua’s revocation of Korean oil deal

By Ise-Oluwa Ige
ABUJA—A Federal High Court sitting in Abuja, yesterday, annulled the revocation by President Umaru Musa Yar’Adua of OPLs 321and 323, two oil exploration licences awarded by the Federal Government to a South Korean consortium led by about four years ago.

The high court said the decision by the government of President Yar’Adua to revoke the rights of the foreign consortium to the oil licences was illegal, unconstitutional, indefensible and unreasonable.

The two oil licences in dispute were issued in respect of oil blocs 321 and 323 by ex-President Olusegun Obasanjo following the oil and gas bid round conducted in 2005.

 President Yar’ Adua
President Yar’ Adua

South Korea has a 60 per cent stake, with a British company owning 30 percent and a Nigerian firm, the remaining 10 percent, in the product_sharing deal.

Preliminary estimates suggest that the revoked oil fields could hold as much as one billion barrels of hydrocarbons.

The outgoing Chief Judge of the Federal high court, Justice Abdullahi Mustafa who voided the revocation of the oil licences yesterday held that President Umaru Musa Yar’Adua lacked the legal powers to revoke oil exploration licences issued the consortium, especially since he was not the nation’s oil minister.

The high court judge consequently reinstated the rights of the foreign corporation to the two oil exploration licences even as he restrained the Federal Government and all its agencies and departments having anything to do with the oil bloc not to interfere or disrupt the valid contract of the foreign corporation.

Both the Federal Government and the Korea National Oil Corporation had hailed the judgment as detailed and sound.
Chief Robert Clarke (SAN) who is the lead counsel to the KNOC spoke for his client yesterday while Mr Osaro Eghobamien (SAN) spoke for the Federal Government.

But Eghobamien said he could not assure that his client would not appeal the judgment.

He said the judgment was detailed and that he would need to go through it to advise the Federal Government on what to do.

The senior advocate said even if he was convinced that the judgment was okay and needed not to be appealed, he would comply with whatever instruction given by his client regarding the issue of appeal.

He refused to condemn the judgment yesterday.

Chief Clarke (SAN) said the credibility of the legal regime had been restored by the judgment.
He said the judgment would give the international community the relief that Nigeria had a legal regime.

Former President Olusegun Obasanjo’s administration in 2005 had awarded a consortium led by South Korea’s KNOC rights to two key oil blocks in return for a pledge of major infrastructure investment in Africa’s top oil producer.

The contract was awarded by President Obasanjo in his capacity as both the President of the Federal Republic of Nigeria and the Minister of Petroleum.

The combination of the two offices by ex-President Obasanjo was recognised by section 5 of the 1999 constitution and section 2(1) of the Petroleum Act.

Besides the pledge of major infrastructure investment in Nigeria, KNOC was also by the provisions in the Memorandum of Understanding between the two parties expected to pay to the Nigerian government a total $485million as signature bonus on the two oil blocs.

The Korean Nation Oil Corporation had paid $92million dollars in cash as part payment of the signature bonus within time.

It also applied for extension of time within which to pay the balance.

It specifically wrote a letter to the government demanding for 180 days to pay up and the government of President Yar’Adua agreed in writing.

But before the expiration of the 180 days extension already approved by the government, President Umaru Musa Yar’Adua wielded the big stick by revoking the two oil licences on account that the agreed $485million signature bonus was not paid in full.

The decision was unilateral and KNOC was not allowed to make any input.

The letter communicating the decision by the Federal Government to withdraw the two oil exploration licences was authored Mr Odein Ajumogobia (SAN), a Minister of State for Petroleum on behalf of President Umaru Yar’Adua.

Aggrieved by the decision, KNOC invoked the jurisdiction of the Federal high court, Abuja for determination of a couple of constitutional cum legal questions touching on whether President Umaru Musa Yar’Adua had the powers to cancel its operating licences when he is not a petroleum minister.

The foreign firm asked the court to issue an order of certiorari quashing the decision by President Yar’Adua revoking the two oil licences if the questions posed by it are resolved against President Yar’Adua.

KNOC sued President Yar’Adua, the Federation Attorney-General, the Department of Petroleum Resources among others but excluded NNPC.

The Federal Government came to court to defend the action of President Yar’Adua.

The government first brought a preliminary objection to challenge the competence of the suit by KNOC.

Specifically, the government asked the high court to hold that the foreign corporation lacked the locus standi to sue; that its suit did not disclose any reasonable cause of action; that the suit was statute barred; that it was speculative and frivolous and that the case as constituted was incompetent.

The trial high court ordered parties to file written briefs even as he rolled both the originating summons and the preliminary objection together.

Delivering  judgment in the case yesterday, the trial high court judge resolved all the grounds of the objection by the Federal Government against it.

Justice Mustafa who said that the action of President Yar’Adua was totally illegal said the decision by the government to revoke the rights to the two oil licences was unreasonable.


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