By Kennedy Mbele

 Federal High Court sitting in Lagos has delivered a landmark judgment nullifying the revocation of the Dawes Island Marginal Field licence and restoring it to Eurafric Energy Limited, bringing to a close one of the most contentious disputes in Nigeria’s marginal field administration history.

In a judgment delivered on January 29, 2026, in Suit No. FHC/L/CS/628/2021, the court held that the revocation of the marginal field licence initially granted to Eurafric Energy Limited was unlawful, null and void, and that every benefit derived from the revocation was legally unsustainable.

The court consequently ordered the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), successor to the defunct Department of Petroleum Resources (DPR), to immediately reinstate the Dawes Island Marginal Field licence to Eurafric Energy Limited.

In the same judgment, the court set aside the subsequent award of the field to Petralon 54 Limited and voided in its entirety the purported Farm-Out Agreement executed between Petralon and the Nigerian National Petroleum Company Limited (NNPC), holding that the agreement was founded on a defective and unlawful title.

Background 

The Dawes Island Marginal Field, located in OPL 2006, Okrika, Rivers State, was originally awarded to Eurafric Energy Limited, which held majority equity and operated the asset.

In line with industry practice, Eurafric later admitted Tako E&P Solutions Limited as a technical and financial partner. Tako, in turn, ceded part of its interest to Petralon 54 Limited, resulting in a joint venture structure in which Eurafric retained majority equity and operational control.

Court documents showed that the arrangement was regulator-approved, contractually defined, and based on shared obligations of funding, performance, and good faith.

However, the relationship between the joint venture partners later deteriorated. Eurafric maintained that both Tako and Petralon failed to meet their technical and financial commitments under the Farm-In Agreement, forcing Eurafric to shoulder a disproportionate share of the project’s funding to prevent licence termination.

By April 2020, when the marginal field licence was revoked, the joint venture had reportedly produced over 62,000 barrels of crude oil, and Eurafric had invested several millions of dollars in the development of the asset—facts the court noted were not in dispute.

Revocation

In April 2020, the DPR revoked the licences of several marginal field operators, including Dawes Island. This was later followed by a Presidential directive approving the reinstatement of revoked licences upon the payment of applicable signature bonuses.

Despite this directive, the regulator did not reinstate the Dawes Island licence to the original joint venture. Instead, the field was re-awarded solely to Petralon 54 Limited, effectively excluding Eurafric, the majority equity holder and operator.

Eurafric challenged the action, arguing that the re-award ignored its subsisting rights, its investments in the field, and the spirit and letter of the Presidential directive.

Dispute

During the pendency of the dispute, tensions escalated between the parties. Eurafric alleged that Petralon engaged in a series of actions aimed at appropriating the asset exclusively, including undisclosed petitions to the petroleum ministry, disputed arbitration proceedings, and multiple court actions.

In a related suit, FHC/L/CS/1209/2021, the Federal High Court dismissed Petralon’s claims against Eurafric and the arbitral tribunal, awarding costs against Petralon.

Further controversy arose over crude oil produced during the interim period after the re-award. Eurafric alleged that Petralon sold the crude oil without disclosure to joint venture partners and withheld financial records.

This led to another action, Suit No. FHC/L/CS/1686/2022, in which the court compelled Petralon to disclose crude sales and financial information to the affected parties.

National Assembly intervention

Beyond the courts, the matter also attracted legislative scrutiny. The House of Representatives Committee on Public Petitions of the 9th Assembly conducted an inquiry into the dispute.

In its report, the Committee affirmed the existence of the joint venture, faulted the exclusive re-award of the field to Petralon, and described the situation as inequitable and irregular. It recommended the restoration of the licence to its pre-revocation status in the interest of fairness, peace, and national economic interest.

Court’s findings

In its final judgment, the Federal High Court agreed with Eurafric’s position, holding that regulatory powers must be exercised in accordance with the law and that illegality cannot be validated by subsequent transactions.

The court ruled that Petralon could not lawfully retain benefits derived from an invalid revocation and that the NUPRC was bound to restore the field to its original awardee.

Industry implications

Legal and industry observers say the judgment carries significant implications for Nigeria’s marginal field regime, particularly in relation to joint venture rights, regulatory discretion, and investor confidence.

For Eurafric Energy Limited and its stakeholders, the judgment marks the end of nearly six years of uncertainty. For the wider oil and gas sector, the decision is being viewed as a reaffirmation of judicial oversight in the administration of national petroleum assets.

As the dust settles on Dawes Island, the ruling is expected to shape future conduct among operators, regulators, and partners—underscoring that while disputes may linger, the courts remain the final arbiters of legality and equity in Nigeria’s energy sector.