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OML 11: Why court ordered FG to renew Shell’s oil lease for 20 years

By Ikechukwu Nnochiri

The Abuja Division of the Federal High Court, on Friday, ordered the Minister of Petroleum Resources to renew Oil Mineral Lease, OML 11 to Shell Petroleum Development Company of Nigeria, SPDC, for 20 years.

The court judgement followed a legal action that Shell instituted against the Federal Government through the Minister of Petroleum Resources and the Minister of State.

However, rather than 30 years the oil firm prayed for in the suit, Justice Taiwo Taiwo ruled that renewal would be for only 20 years in line with the Petroleum Act.

President Muhammadu Buhari had in his 43-man new cabinet, retained himself as the Minister of Petroleum Resources.

FG had asked the court to dismiss the suit and decline to okay renewal request by SPDC owing to challenges involving national security

It told the court that as a responsible government whose primary objective is to guaranty the safety of lives and properties in the country, it refused to renew OML 11 as a pre-emptive measure to prevent the occurrence or escalation of a security breach in Ogoni area.

SPDC had in its suit, sought an order is to compel the Minister of Petroleum Resources (Buhari) to renew OML 11, in addition to 14 other oil mining leases approved for it on June 30, 2019.

In a counter-affidavit filed in opposition to the suit marked CS/524/19, FG disclosed that OML 11 covered an area of 3,095.25 square kilometres that stretched between Rivers and Imo states with 14 oilfields, 10 out of which is located in Ogoni area of Rivers State.

It said besides the security challenges, SPDC, tried to compel it to commit an illegality since an approval by the Minister of State for Petroleum of a single oil block size of 3, 095.25, is tantamount to facilitating illegality in contravention of the (Drilling and Production ) Regulation that limited the size of OML block to 1.295 square kilometers(500 miles).

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FG, through its lawyer, Mohammed Diri, therefore urged the court to reject the suit and dismiss it for want of merit.

Counsel, to the SPDC, Funke Adekoya, SAN, prayed to the court to grant all the reliefs by the plaintiff and order FG to okay the renewal of the OML11, for 30 years.

A memo signed by the Chief of Staff to the President, Abba Kyari, dated March 1, 2019 with reference number SH/COS/24/A/8540, had directed the the Nigerian Petroleum Development Company Limited, NPDC, which is the upstream subsidiary of the Nigerian National Petroleum Corporation, NNPC, to take over operation of the entire OML 11 from SPDC.

SPDC had operated the plum oil block until 1995 when Ken Saro-Wiwa was hanged by the military regime of the late Gen. Sani Abacha.

Following the execution of the environmental activist, the Ogoni people, who had sacked Shell from Ogoni since 1993, also denied the oil giant access to the oil blocks.

Vanguard learned that though the lease that was originally granted to SPDC ought to have expired in June this year, the firm, in 2018, applied for renewal of the licence.

FG’s bid to resume mining activities within the region covered by OML 11 had sparked fresh controversy, with Ogoni people vowing to resist such move without the government addressing fundamental issues that precipitated the struggle that led to Saro-Wiwa’s death.

Kyari’s Memo had directed NNPC/NPDC, “to take over the operatorship, from Shell Petroleum Development Company, of the entire OML 11 not later than 30 April 2019 and ensure smooth re-entry given the delicate situation in Ogoni Land.

“NNPC/NPDC to confirm by May 2, 2019, the assumption of the operatorship”.

In his judgment, Justice Taiwo said it was the duty of the court to ensure that it was bounded by the law.

He noted that the provision of the law made it mandatory for the Minister of Petroleum to grant a renewal of the license if an applicant met all the conditions.

“My understanding of paragraph 13 (1) of the first schedule to the Petroleum Act states that it is mandatory for the minister to grant a renewal if all the conditions have been met”.

He said there was no evidence before him to prove that the plaintiff failed to fulfil any of the conditions stated in the Petroleum Act.

However, he said the court could not go outside the provision of the law to grant SPDC 30 years.

He held that the Drilling and Production Regulation cannot be upgraded to the position of the Petroleum Act and the issue that the defendant could not grant more than 1, 295 square metres as the case with the total area covered by the OML 11, was immaterial since the lease in existence before the regulation came into being.

“I, therefore, find that having fulfilled all obligations required for the renewal of Oil Mining Lease 11, including the payment of rent and royalties and have applied for the renewal of the lease in line with the law, the plaintiff should be granted the renewal.

“I hereby order that the defendants are hereby compelled to grant the application for the OML 11 but it shall be in accordance with Paragraph 10 of the first schedule to the Petroleum Act as regards the number of years stated therein and that there shall be no reduction in size of OML 11 as being contemplated by the defendants,” Justice Taiwo held.

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