Court Allows Malabu Oil and Gas to Challenge Federal Government Over OPL 245
The Federal High Court in Abuja has granted Malabu Oil and Gas Limited the opportunity to pursue a judicial review against the Federal Government concerning the contentious bifurcation of Oil Exploration License (OPL) 245. This ruling was made on Thursday by Justice Mohamed Umar, who found merit in the ex-parte motion filed by the company, represented by Senior Advocate of Nigeria Reuben Atabo.
Justice Umar expressed satisfaction with the details outlined in the affidavit attached to the application, particularly the key points advanced by Malabu. Consequently, the judge adjourned the hearing until June 11, allowing the company to file and serve the initial summons pertaining to the sought relief.
In the case referenced as FHC/ABJ/CS/871/2026, Malabu Oil and Gas Limited has named President Bola Tinubu, the Attorney General of the Federation, and the Minister of Petroleum Resources as the first to third defendants. This legal challenge follows President Tinubu’s announcement on March 5, in which he declared an end to a long-standing dispute over OPL 245, one of Nigeria’s most vital deep-sea oil reserves.
At that time, the President’s office indicated that the resolution aimed to facilitate developments that could potentially increase Nigeria’s oil production capacity by approximately 150,000 barrels per day. While specific details of the agreement remain limited, it has been characterized by the government as a historic settlement essential for the development of Nigeria’s strategically crucial deep-sea resources.
In its lawsuit, Malabu alleges that the federal government has improperly divided OPL 245 into four distinct assets, which were then reassigned to Shell Nigeria Ultradeep Limited, Shell Nigeria Exploration Production Company Limited, Nigeria Agip Exploration Company Limited, and the Nigerian National Petroleum Company (NNPC) Limited. The company claims this reallocation occurred through the OPL 245 Resolution Agreement, signed around the time of President Tinubu’s announcement, and was executed without the consent of Malabu’s directors.
The case is set to return to court on June 11 for further proceedings, as the stakes remain high in the oil-rich region.
Historical Context of OPL 245
Malabu Oil and Gas was originally awarded OPL 245 in 1998 during the administration of General Sani Abacha. Established under controversial circumstances by Abacha’s son and then-Oil Minister Dan Etete, the company was mandated to develop the oil block in partnership with an international firm and pay a $20 million signing bonus. However, Malabu paid only $2 million before entering into a joint operating agreement with Shell Nigeria Ultra Deep Limited (SNUD). The license was revoked shortly thereafter in July 2001.
Subsequently, under former President Olusegun Obasanjo, Malabu’s technology partners, ExxonMobil and Shell, were invited to bid for OPL 245 alongside the NNPC. Ultimately, Shell secured the rights and commenced construction in the area. Malabu accused Shell of colluding with the government to seize control of the block, prompting the Nigerian House of Representatives to direct the government to re-grant the license to Malabu.
While Malabu’s legal battles continued, then-Minister of Petroleum Edmond Dacole sought an out-of-court settlement. The emergence of Dan Etete’s association with the block has heightened tensions in the Niger Delta, with local communities demanding a thorough audit of the oil concession process. Eventually, the Obasanjo administration reversed its stance and re-awarded OPL 245 to Malabu, contingent on a new payment of $210 million in addition to the $2 million already paid. Malabu complied but this led to further disputes.
In response to the complex dynamics surrounding OPL 245, Shell pursued arbitration in Washington, D.C., and launched separate legal actions in Nigeria seeking over $2 billion in damages related to the block’s risks. A series of settlement negotiations failed until a framework was developed in 2006, culminating in a significant settlement agreement brokered in 2011 under President Goodluck Jonathan. This agreement involved Malabu waiving claims against OPL 245 in exchange for a compensation payment ultimately amounting to $1.092 billion.
International Scrutiny and Legal Ramifications
This deal drew international scrutiny, with Italian prosecutors alleging that a substantial portion of OPL 245’s $1.3 billion purchase price had been misappropriated by various politicians and intermediaries. Several figures, including executives from Shell and Eni, faced legal challenges in Italy but were acquitted in 2021.
In Nigeria, the former Attorney General, Mohammed Adoke, faced allegations connected to a $1.1 billion scandal. He was charged with benefiting fraudulently from deals he brokered during his tenure but maintained his innocence. Charges against him were eventually dismissed due to insufficient evidence. In a separate case, the Economic and Financial Crimes Commission (EFCC) accused him of laundering money related to bribery allegations, but he was also acquitted in this instance.
Adoke has since criticized the prolonged legal battles associated with OPL 245, describing them as a drain on resources. Following the recent resolution announced by President Tinubu, he urged the Nigerian government to formally apologize for the “years of persecution and humiliation” tied to the OPL 245 saga.
