The purported sale of SPDC’s kidney island asset and interest in OML 11
Aug 13, 2020
SPDC is very disappointed that the Rivers State High Court affirmed the enforcement of the purported sale of SPDC’s assets in Kidney Island and specified interests in OML 11, to the Rivers State Government.
In the underlying judgement (Chief Agbara and Others v. SPDC ) which is being enforced by the sale, the claimants themselves accepted in the High Court in England that the claim was “miscalculated” and “materially overstated”. SPDC has therefore filed an appeal and an application for a stay of execution of this recent judgment issued by the Rivers State High Court on 13 August 2020.
Prior to the instant case, the Rivers State Government had filed a similar case at the Federal High Court Abuja asking the court to direct the Minister of Petroleum Resources to recognise the same purported acquisition of SPDC’s interests in the named assets through auction sale. The Rivers State Government withdrew the Abuja case in July 2020 and filed this new case at the Rivers State High Court without joining the Minister of Petroleum Resources. An application by SPDC to join the Minister of Petroleum Resources to the suit as a necessary party for a just determination of the issues was denied by the court. Under the Nigerian Petroleum Act, any acquisition or assignment of interests in a licence or lease must have the consent of the Minister of Petroleum Resources.
The root case, Chief Agbara and Others v. SPDC, which led to the purported sale of SPDC’s assets and interest in OML 11 is still the subject of ongoing proceedings in several courts, including the supreme court, and it remains the position of SPDC that no payment is due and any purported sale or enforcement of payment is premature and prejudicial to ongoing proceedings. The auction sale is also being challenged on appeal by SPDC.
The root case has its origin in a spill caused by third parties during the Nigerian Civil War, a challenging period which resulted in significant damage to oil and gas infrastructure in the Niger Delta region. While SPDC does not accept responsibility for the spill, the affected sites in Ejama Ebubu community were fully remediated, and this was certified by the government regulator.
The claim for N17billion as damages was first brought by the Ejama Ebubu community against SPDC in 2001 in the Federal High Court of Nigeria. In 2010, the court gave judgment against SPDC and awarded the claim without SPDC being given reasonable opportunity to defend the facts of the case. Indeed, this case has focused too long on procedural issues and not on its merits – we have always been clear that we are ready to defend this case based on the available facts.
SPDC appealed the 2010 judgment and obtained an order to stay the execution of the judgment upon the provision of a bank guarantee issued by First Bank of Nigeria Limited in favour of the claimants. Despite this matter being the subject of ongoing proceedings in the Nigerian courts, the claimants went ahead to seek to enforce the judgment in both Nigeria and England.
The English court last year rejected the claimants’ attempt to enforce the Nigerian court judgment in the UK, referring to a ‘breach of natural justice’ in the proceedings against Shell in Nigeria. The English court also found that the claimants had “materially over-stated” the value of the judgment which the claimants admitted was 34.716billion. The court therefore ruled that it would not be just and convenient for a Nigerian judgment to be enforced in the UK which the claimants acknowledge is “miscalculated”.
On Monday, March 2, 2020, the Federal High Court sitting in Abuja issued an order attaching the sum of N182billion in First Bank of Nigeria Limited’s statutory account with the Central Bank of Nigeria in favour of Ejama Ebubu community in Rivers State.
SPDC and other parties affected by the March 2, 2020 order of the Federal High Court filed separate appeals, as well as applied to set aside the order and restrain its execution pending the appeal decision. In accordance with the spirit of fair hearing in the Nigerian judicial system, we remain of the view that until the pending appeals are heard and determined, SPDC is not liable to make any payments, and therefore none of its assets or interest should be attached to satisfy the judgement.
SPDC operates the SPDC Joint Venture on behalf of the JV partners which include the Federal Government, represented by Nigeria National Petroleum Corporation (NNPC), with 55% participating interest.
Bamidele Odugbesan
Media Relations Manager
August 14, 2020
Softphone: +234 807 022 8045
Cautionary note
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this announcement “Shell”, “Shell Group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Royal Dutch Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to entities over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.
This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”, “ambition”, ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement , including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak;and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell’s Form 20-F for the year ended December 31, 2019 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader. Each forward-looking statement speaks only as of the date of this announcement, August 14, 2020.Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.
We may have used certain terms, such as resources, in this announcement that the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov.