The Federal High Court has set January 22, 2025, for the Shell Petroleum Development Company of Nigeria Limited and Global Gas and Refining Limited to report on their out-of-court settlement efforts regarding the latter’s allegation that Shell failed to supply wet gas in accordance with the terms of their Gas Processing Agreement (GPA) dated March 15, 2002.
Justice Inyang Ekwo scheduled the new date on Monday after both parties informed the court that settlement discussions were still ongoing since the last adjourned date, September 23, 2024, in the lawsuit filed by Global Gas’s legal team.
The applicant seeks an order restraining the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) from “approving, authorizing, consenting to, or otherwise granting permission for the $1.3 billion sale/divestment of the assets of the 1st Respondent (SPDC) to Renaissance Consortium.”
Global Gas claims and Shell counterclaims
The Executive Chairman of Global Gas, Mr. Ken Yellowe, had stated before the court that his company initiated arbitral proceedings against Shell, alleging that it failed to supply wet gas in line with the terms of the Gas Processing Agreement dated March 15, 2002.
- Yellowe, through his lawyer, Patrick Ikweato (SAN), argued that unless the court grants an order temporarily safeguarding the “assets” in dispute from being sold, the company’s 2002 business deal with Shell could be jeopardized.
- The applicant further submitted that the dispute is already before the Supreme Court of Nigeria, but since the NUPRC is not a party at the apex court, there is a need for the trial court to restrain the statutory agency of the Federal Government of Nigeria.
“In the event of such a scenario, the Applicant will be without any remedy for settling the ongoing dispute over the breach of the 1st Respondent’s obligations to supply Rich Gas to the Applicant as agreed in the GPA dated March 15, 2002.
“The instant application for an Interim Measure of Protection merely seeks to preserve the Applicant’s rights against the intended divestment/sale of SPDC’s onshore facilities, as publicly announced by its parent company, Shell PLC,” Yellowe stated in an affidavit.
- In the applicant’s further affidavit, Celestine Ezeokeke stated that he was aware that while the suit is pending before the court, “the NUPRC publicly announced/advertised that it has begun due diligence for the divestment of the Shell Petroleum Development Company (SPDC) assets, totaling crude oil and condensates of 6.73 billion barrels reserve, to Renaissance African Energy Company Limited (Renaissance).”
- SPDC’s legal team, in a counter-affidavit, maintained that it “did not sell its onshore assets and facilities in Nigeria to anyone.”
- In its counter-affidavit, SPDC’s Legal Counsel, Global Litigation (Sub-Saharan Africa), Mr. Kingsley Osuh, informed the court that the dispute between his company and Global Gas is already before the Supreme Court for final determination.
- He added that the transaction with Renaissance was not an asset sale but a share sale transaction, where the SPDC’s shareholder agreed to sell its shares in the SPDC to a company called Renaissance.
He further stated that the applicant’s claims are for liquidated sums, specifically a compensation figure for an alleged breach of contract, and if the claim is upheld by the courts, the SPDC, as a corporate entity, is capable of paying the compensation to the applicant.
What transpired in court
At the resumed hearing on Monday, Ikweato informed the court that his client is awaiting Shell to finalize its side of the agreement terms.
- Shell’s legal team responded that the parties are trying to settle “in the spirit of amicable resolution.”
- NUPRC counsel, Chikaoso Ojukwu SAN, urged the court to compel the parties to notify him about their settlement discussions.
- In a brief verdict, Ekwo adjourned the case to January 22, 2025, for a “report of settlement.”
He also directed that when Shell and Global Gas exchange correspondence regarding their settlement moves, the NUPRC must be copied.
Backstory
In 2021, Shell announced its intention to divest its Nigerian onshore assets due to the incompatibility of its long-term energy transition strategy with the operational challenges in Nigeria, such as theft and oil spills.
- After a pause in the divestment process in 2022, Shell resumed talks in June 2023 to sell its 30% interest in the joint venture known as SPDC, which operates onshore and in shallow-water oil and gas fields.
- With the new administration of President Bola Tinubu, which began in May 2023, advisers recommended closing outstanding divestments sought by international oil producers to enhance petroleum output.
- Some months ago, NUPRC established a divestment framework to oversee the evaluation of applications for ministerial consent regarding the Shell Petroleum Development Company of Nigeria Ltd. (SPDC) divestment process.
However, civil society groups, led by Amnesty International, called on the Nigerian government to block Shell Plc’s proposed sale of its onshore oil business in Nigeria.
- Renaissance Consortium later announced the signing of a landmark transaction with Shell International PLC to acquire its entire shareholding in The Shell Petroleum Development Company of Nigeria Limited (SPDC).
- For the Shell Petroleum Development Company of Nigeria Limited (SPDC) deal with Renaissance Consortium, NUPRC later revealed that documents had been submitted by SPDC and are “undergoing due diligence.”
- Meanwhile, in a statement on September 11, 2024, NUPRC’s Head of Public Affairs and Corporate Communication, Mrs. Olaide Shonola, denied reports claiming that the Commission had accepted Shell International Plc’s bid to sell its onshore assets to Renaissance in a transaction worth $1.3 billion.
In October 2024, NUPRC reportedly rejected the proposed $1.3 billion sale of onshore oilfields to the Renaissance Group, citing the buyer’s lack of qualification to manage the assets, according to a Reuters report.
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