Malabu Block to Take FID In Spite of Court Proceedings

ENI and Shell are proceeding to Final Investment Decision on a field in the Oil Prospecting Lease (OPL) 245, despite a pending court case in which they are charged with corrupt practices on the same asset.

The two European majors are on course to taking FID on the Zabazaba field, the bigger of the twin Zabazaba-Etan fields, with the NNPC, an agency of the same Nigerian Government which is prosecuting a case against them, before the end of the second quarter 2017.

The invoice for the development of Zabazaba, located in 2,000metre water depth, the farthest offshore of any field development in Nigeria, is $13.5Billion. The project will drain 560Million barrels of oil over the course of 15 years.
As there is no indication that the government, through the Economic and Financial Crimes Commission (EFCC), has withdrawn from the case, it is curious that petroleum sector agencies of the Nigerian government are going ahead with the planned FID. OPL 245, also known as Malabu Oil Block, has thrown up international, high profiled legal interest, involving lawyers in three countries.
As recently as two months ago, Italian prosecutors asked for Claudio Descalzi, ENI’s global Chief Executive Officer, to stand trial over alleged corruption in the Malabu Oil Block case, according to the news agency Reuters quoting judicial sources in Italy. The prosecutors also asked for 10 other people, including Paolo Scaroni, the predecessor to Descalzi, to be sent for trial along with the ENI and Royal Dutch Shell companies. In the same month, theEFFCC, sought and obtained a court order for the asset to the Nigerian state.

But the updates on field development activities in the media last week didn’t reference the court challenges. Simbi Wabote, the Executive Secretary of the National Content Development Monitoring Board NCDMB (an agency that ensures that in-country capacity is taken care of in any oil and gas project) , reportedly affirmed his board’s readiness to expedite national content approval for the Zabazaba field development, which has moved from technical bid tenders to commercial tenders. NNPC officials too are raring to go.

Whereas Wilson Uwajuoren, EFCC’s spokesperson declined to respond to our query about what EFCC thinks of the progress of the project, legal opinion is divided on the progress of the project. “If they go ahead it would mean that the government is even more dysfunctional than we thought”, says one highly ranked private petroleum lawyer who has served in the upper reaches of government.






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