Shell’s OML 11: FG ordered to renew licence for 20 years

The Minister of Petroleum Resources has been instructed by the Federal High Court in Abuja to grant the renewal of the Oil Mineral Lease (OML) 11 licence to Shell Petroleum Development Company of Nigeria. 

The renewal is expected to last for 20 years as against the 30 years requested by the company, according to Justice Taiwo Taiwo. 

The case with suit number CS/524/19 was instituted against the Minister of Petroleum Resources, President Muhammadu Buhari and the Minister of State for Petroleum Resources, Timipre Silva to seek the intervention of the court over the controversy surrounding the OML 11.

What you should know: The Petroleum Act of 1969 (as amended) empowers the Minister of Petroleum to grant or revoke the exploration, prospecting and production rights of the operating companies. The Minister of Petroleum Resources, President Muhammadu Buhari tried to revoke Shell’s license in a bid to solve the protracted disputes between the people of Ogoniland and Shell over oil exploration of their land.

The Minister of Petroleum Resources, who is also President Muhammadu Buhari, was the 1st defendant while the 2nd defendant was the Minister of State for Petroleum Resources, Timipre Sylva.

Claims: Shell Petroleum Development Company (SDPC) wanted to force the Ministry to renew OML 11, as well as 14 other oil mining leases that were approved for it on June 30.

The Federal Government, however, explained that its decision not to renew the operating license was in the best interest of the nation’s security.

The Counsel to the FG, Mohammed Diri, defended the government, saying that government’s role was to guarantee the safety of lives and properties and refusal to renew OML 11 was one of those ways to prevent any escalation of a security breach in Ogoniland.

OML 11 covers an area of 3,095.25 square kilometres that stretch between Rivers and Imo with 14 oilfields, 10 out of which are located in Ogoni area of Rivers.

SPDC went out of its way to compel the government to commit an illegality because an approval by the Minister of State for Petroleum of “a single oil block size of 3, 095.25 is tantamount to facilitating illegality which contravenes the Drilling and Production Regulation that restricts the size of an OML block to 1.295 square kilometres (500 miles),” Diri argued.

He asked the judge to dismiss the case since SPDC’s suit was devoid of merit and had no strong claims.

Justice Taiwo noted that the provision of the law makes it mandatory for the Minister of Petroleum to grant a renewal of a license if an applicant met all the conditions.

My understanding of paragraph 13 (1) of the first schedule to the Petroleum Act states that it is mandatory for the minister to grant a renewal if all the conditions have been met,” he said.

The judge held that there was no evidence before him to prove that the plaintiff had not met with the conditions stated in the provision.

I see no conflict in these two paragraphs. I am of the view that what these paragraphs say is that a term of a mining lease shall not exceed 20 years,” he added.

He also said the Drilling and Production Regulation cannot be upgraded to the position of the Petroleum Act and the issue that the defendant cannot grant more than 1, 295 square meters as the case with the total area covered by the OML 11 which had been in existence before the regulation came into being.

I, therefore, find that having fulfilled all obligations required for the renewal of Oil Mining Lease 11, including the payment of rent and royalties and having applied for the renewal of the lease in line with the law, the plaintiff should be granted the renewal.

I hereby order that the defendants are hereby compelled to grant the application for the OML 11 but it shall be in accordance with Paragraph 10 of the first schedule to the Petroleum Act as regards the number of years stated therein and that there shall be no reduction in size of OML 11 as being contemplated by the defendants,” Justice Taiwo ruled.

The backstory: In March 2019, the Nigerian Government directed the Nigerian National Petroleum Commission (NNPC) to take over the entire OML 11 from Shell Petroleum Development Company.

This was contained in a letter titled ‘Operatorship of Entire Oil Mining Lease 11′. OML 11 in Ogoniland is one of the most important blocks in Nigeria with 33 oil and gas fields including Bodo, Bodo West and Yorla fields.

The oil blocks have caused protracted disputes between the people of Ogoniland and Shell over the degradation of their environment by the oil giant.

The local arm of Shell, SPDC abandoned activities in the Ogoni section of the lease for about 26 years following the crisis that erupted after the killing of prominent Ogoni leaders including Ken Saro-Wiwa. In 2015, SPDC agreed to pay a settlement of $15.5 Million (N3 billion), just to resolve the case.

Source: Nairametrics

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