Brittania U vs Chevron: The Nigerian Economy Will Be the Loser
“It is wrong for the minister to grant consent to the transaction as it is still a subject of litigation in court. The matter is subjudice and Chevron, a multinational oil company, should know better than to go through with this,” so said Mrs. Uju Ifejika, MD/CEO Brittania U following the announcement that Chevron had concluded its divestment of OMLs 52, 53 and 55 to the Seplat Consortium made up of Seplat, Amni and Belemaoil.
The deal was concluded after Chevron and its preferred bidders obtained ministerial consent to conclude the transaction, which began two years earlier following a bid and signing of an Special Purchase Agreement (SPA) between the parties.
The announcement was made on Thursday, February 5, in two separate statements by Seplat in which it informed the public that it had completed the process of acquiring 40 per cent interest in OML 53 with NNPC holding 60per cent. Seplat was also named the operator.
Seplat also acquired 56.25per cent equity interest in Belemaoil to provide financial and technical support to this entity.
CEO of Seplat, Austin Avuru, whose company has been joined in the suit Brittania U filed against Chevron challenging the validity of the deal and praying the courts to declare her the highest bidder had this to say when asked whether his company had contravened the law: “It is unthinkable that a corporate entity like SEPLAT that prides itself with corporate governance and due process will do anything that offends the laws of this country. It is unthinkable; we will not do that.”
Well, while the parties insist on their positions, the industry is waiting for the Supreme Court to adjudicate on the matter and provide clarity.
The case was heard at the Supreme Court on Tuesday February 24, 2015, following an appeal filed by Brittania U praying the apex court to grant an interlocutory injunction requesting Chevron to stay action on the transfer of assets OML 52, 53 and 55 to Amni, Seplat and Belema oil respectively.
After listening to Rickey Tarfa, SAN, the presiding justice, Hon. Justice Fabiyi of the Supreme Court of Nigeria made some introductory remarks, which have since been interpreted to mean victory for either party depending on whose version you listen to.
The justice had called on D.D Dodo, SAN and Rickey Tarfa, counsels representing Seplat and Brittania U respectively, to as senior members of the bar, advise their clients on the need to respect the authority of the court as the case was ripe for hearing and not take any action that would over reach the case.
Barrister Sunday A. Adedokun in explaining the justice’s remarks said: “What the Justice has done is to ask the counsels to prevail on their clients to abide by the letters of the law.”
And so the contending parties will now wait for the apex court to decide. But while they wait, it has become germane to ask how an ordinary transaction led to a Lagos High Court, the Appeal Court and now the Supreme Court.
It all started in 2013 when Chevron put up three acreages for sale – OMLs 52, 53 and 55. In putting up the bid, Chevron had announced its intention of selling the three OMLs to one preferred bidder not necessarily the highest bidder.
At the end, the assets attracted over 30 bidders leading Chevron to whittle it down to a short list and when eventually the sealed bids were opened, Britannia U had bid $1.6billion but she later revised her bid to $1.015billion.
The Seplat Consortium made up of Seplat and Amni (with Belema oil joining the consortium subsequently) which put in a bid of $800m was declared the preferred bidder and subsequently signed an SPA on November 28, 2014.
Brittania U was not happy with the outcome and asked Chevron to declare its bid winner. It then sought an injunction restraining Chevron from concluding the sale to the Seplat Consortium.
A Federal High Court sitting in Lagos granted the injunction then further granted an extension while the issue of jurisdiction was pending.
Seplat and its consortium went to the Appeal court challenging the High court’s injunction and extension.
The Appeal court ruled in Seplat’s favour and vacated the injunction.
Still not satisfied, Brittania U went to the Supreme Court to contest the Appeal Court’s ruling which was heard on Tuesday January 24, 2015.
The Supreme Court has said it will convey a hearing date to the contending parties via its registrars having asked the parties not to do anything to over reach the case.
But what industry analysts are worried about is that if the transfer of assets gets mired in a legal tangle which could lead to abandonment of the assets, the economy will be the loser because Seplat estimates net recoverable hydrocarbon volumes attributable to its 22.50 per cent effective working interest in OML 55 to be approximately 20 MMbbls of oil and condensate and 156 Bscf of gas (total 46 MMboe).
Current gross production at OML 55 is approximately 8,000 bopd while for OML 53, Seplat estimates net recoverable hydrocarbon volumes attributable to its 40.00 per centworking interest to be approximately 51 MMbbls of oil and condensate and 611 Bscf of gas (total 151 MMboe). Current gross production from the Jisike field is approximately 2,000 bopd (approximately 800 bopd on a 40.00 per cent working interest basis). The clock is ticking.
-Dike, an energy analyst wrote from Abuja.