Nigerian Court docket offers Shell and World Fuel January 22 to ‘settle’ 2002 Fuel Processing Contract Phrases
The Federal Excessive Court docket has set January 22, 2025, for the Shell Petroleum Growth Firm of Nigeria Restricted and World Fuel and Refining Restricted to report on their out-of-court settlement efforts relating to the latter’s allegation that Shell failed to provide moist gasoline in accordance with the phrases of their Fuel Processing Contract (GPA) dated March 15, 2002.
Justice Inyang Ekwo scheduled the brand new date on Monday after each events knowledgeable the court docket that settlement discussions have been nonetheless ongoing because the final adjourned date, September 23, 2024, within the lawsuit filed by World Fuel’s authorized crew.
The applicant seeks an order restraining the Nigerian Upstream Petroleum Regulatory Fee (NUPRC) from “approving, authorizing, consenting to, or in any other case granting permission for the $1.3 billion sale/divestment of the belongings of the first Respondent (SPDC) to Renaissance Consortium.”
World Fuel claims and Shell counterclaims
The Government Chairman of World Fuel, Mr. Ken Yellowe, had acknowledged earlier than the court docket that his firm initiated arbitral proceedings in opposition to Shell, alleging that it failed to provide moist gasoline consistent with the phrases of the Fuel Processing Contract dated March 15, 2002.
- Yellowe, by his lawyer, Patrick Ikweato (SAN), argued that except the court docket grants an order briefly safeguarding the “belongings” in dispute from being offered, the corporate’s 2002 enterprise take care of Shell could possibly be jeopardized.
- The applicant additional submitted that the dispute is already earlier than the Supreme Court docket of Nigeria, however because the NUPRC will not be a celebration on the apex court docket, there’s a want for the trial court docket to restrain the statutory company of the Federal Authorities of Nigeria.
“Within the occasion of such a state of affairs, the Applicant might be with none treatment for settling the continuing dispute over the breach of the first Respondent’s obligations to provide Wealthy Fuel to the Applicant as agreed within the GPA dated March 15, 2002.
“The moment utility for an Interim Measure of Safety merely seeks to protect the Applicant’s rights in opposition to the supposed divestment/sale of SPDC’s onshore amenities, as publicly introduced by its dad or mum firm, Shell PLC,” Yellowe acknowledged in an affidavit.
- Within the applicant’s additional affidavit, Celestine Ezeokeke acknowledged that he was conscious that whereas the go well with is pending earlier than the court docket, “the NUPRC publicly introduced/marketed that it has begun due diligence for the divestment of the Shell Petroleum Growth Firm (SPDC) belongings, totaling crude oil and condensates of 6.73 billion barrels reserve, to Renaissance African Vitality Firm Restricted (Renaissance).”
- SPDC’s authorized crew, in a counter-affidavit, maintained that it “didn’t promote its onshore belongings and amenities in Nigeria to anybody.”
- In its counter-affidavit, SPDC’s Authorized Counsel, World Litigation (Sub-Saharan Africa), Mr. Kingsley Osuh, knowledgeable the court docket that the dispute between his firm and World Fuel is already earlier than the Supreme Court docket for closing willpower.
- He added that the transaction with Renaissance was not an asset sale however a share sale transaction, the place the SPDC’s shareholder agreed to promote its shares within the SPDC to an organization referred to as Renaissance.
He additional acknowledged that the applicant’s claims are for liquidated sums, particularly a compensation determine for an alleged breach of contract, and if the declare is upheld by the courts, the SPDC, as a company entity, is able to paying the compensation to the applicant.
What transpired in court docket
On the resumed listening to on Monday, Ikweato knowledgeable the court docket that his shopper is awaiting Shell to finalize its aspect of the Bargain phrases.
- Shell’s authorized crew responded that the events try to settle “within the spirit of amicable decision.”
- NUPRC counsel, Chikaoso Ojukwu SAN, urged the court docket to compel the events to notify him about their settlement discussions.
- In a quick verdict, Ekwo adjourned the case to January 22, 2025, for a “report of settlement.”
He additionally directed that when Shell and World Fuel trade correspondence relating to their settlement strikes, the NUPRC have to be copied.
Backstory
In 2021, Shell introduced its intention to divest its Nigerian onshore belongings because of the incompatibility of its long-term vitality transition technique with the operational challenges in Nigeria, comparable to theft and oil spills.
- After a pause within the divestment course of in 2022, Shell resumed talks in June 2023 to promote its 30% curiosity within the three way partnership referred to as SPDC, which operates onshore and in shallow-water oil and gasoline fields.
- With the brand new administration of President Bola Tinubu, which started in Might 2023, advisers advisable closing excellent divestments sought by worldwide oil producers to reinforce petroleum output.
- Some months in the past, NUPRC established a divestment framework to supervise the analysis of purposes for ministerial consent relating to the Shell Petroleum Growth Firm of Nigeria Ltd. (SPDC) divestment course of.
Nonetheless, civil society {groups}, led by Amnesty Worldwide, referred to as on the Nigerian authorities to dam Shell Plc’s proposed sale of its onshore oil enterprise in Nigeria.
- Renaissance Consortium later introduced the signing of a landmark transaction with Shell Worldwide PLC to amass its total shareholding in The Shell Petroleum Growth Firm of Nigeria Restricted (SPDC).
- For the Shell Petroleum Growth Firm of Nigeria Restricted (SPDC) take care of Renaissance Consortium, NUPRC later revealed that paperwork had been submitted by SPDC and are “present process due diligence.”
- In the meantime, in an announcement on September 11, 2024, NUPRC’s Head of Public Affairs and Company Communication, Mrs. Olaide Shonola, denied experiences claiming that the Fee had accepted Shell Worldwide Plc’s bid to promote its onshore belongings to Renaissance in a transaction value $1.3 billion.
In October 2024, NUPRC reportedly rejected the proposed $1.3 billion sale of onshore oilfields to the Renaissance Group, citing the client’s lack of qualification to handle the belongings, in accordance with a Reuters report.
