Despite the litany of court cases surrounding the award of the juicy deepwater OPL 245, the two principal stakeholders in the acreage, Anglo/Dutch firm Shell and Italian oil giant Eni, are proceeding with the development of the main oil field already discovered.
TheCable Petrobarometer understands that Shell and Eni have taken the final investment decision (FID) to develop the field known as Zabazaba field, which lies in water depth ranging from 1,700 and 2,000 meters and holds an estimated oil reserves of up to a billion barrels.
An Italian court ruled in December 2017 that executives of the two multinational oil companies should undergo trial over allegations of bribery in securing the oil block from Malabu Oil & Gas Ltd in 2011.
The FID followed the completion of the evaluation of the technical and commercial bids late in 2017. The field development project alone will cost $13.5 billion.
The decision has, however, attracted protest by global anti-corruption watchers, who have accused the two multinational oil companies of deliberately promoting corruption in Nigeria.
“Shell and Eni are facing the largest corporate bribery trial in history over this oil block in Italy and charges are also pending in Nigeria. The Nigerian government should withdraw the licence while they seek justice for this corrupt deal in court,” said Barnaby Pace, Campaigner for Global Witness.
In 2012, Shell and Eni paid about $1.3 billion to the federal government to acquire 50% stake each in OPL 245. However, the Italian oil firm is the operator of the block, which is estimated in some quarters as holding up to 9 billion barrels of oil reserves.
But the transaction has since been subject of litigation and investigation by security agencies in the United Kingdom, Italy and Nigeria, on the grounds that the oil block was fraught with irregularities, first having been originally awarded in 1998 for $20 million to Malabu Oil & Gas, a company secretly owned by the then petroleum minister, Dan Etete.
It was later passed on to Shell and Eni in 2011, with the Nigerian government acting as middleman, for US$1.1 billion.
But the huge reserves contained in the block were too much of an attraction for both the Nigerian government and the oil companies for the court cases to hold back, sources familiar with the project said.
“To the oil companies, these litigations are external and have no effect in Nigeria as long as the federal government has cleared them,” said a source.
“For the government, Nigeria needs as more crude oil as it could get, and if you have these companies ready to invest in exploring and producing from such a huge field, then you must support them.”
In March 2017, an Abuja High Court ruled that Shell and Eni are entitled to hold on to the oil licence.
According to the federal government economic recovery and growth plan, Nigerian needs to grow oil production to 2.5mbd over the next three years.
Development of the Zabazaba oil field, coupled with the streaming of Total-operated 200,000 b/d Egina deep offshore later this year, hold the key to achieving this target, according to Ibe Kachikwu, the minister of state for petroleum resources.