Shell has admitted to dealing with former Nigerian Oil Minister Dan Etete in the purchase of Malabu's Oil Prospecting License (OPL) 245 from the Nigerian government for US$1.3 billion in 2011. Dutch and Italian authorities are investigating the role of Shell and its partner Eni in the deal. Meanwhile, Nigeria's Economic and Financial Crimes Commission (EFCC) is also pursuing a lawsuit in the country against both firms for alleged corruption regarding the same deal.

Main Findings

  • Shell had previously denied any involvement with Etete and his firm Malabu in the OPL 245 transaction, but changed its position after an email leak in April 2017 showed the firm's executives exchanged messages about corruption risk and Etete's potential involvement in the transaction. The firm said it knew the government would pay off Etete to settle his claim on the oil block, and decided that the only way to complete the purchase through a negotiated settlement was to deal with the former oil minister and his firm.
  • In January 2017, prosecutors in Italy alleged that Eni and Shell held talks with Nigerian officials who approved the license sale without competitive tendering and with exemption from all domestic taxes. The oil firms allegedly transferred US$801 million to Etete's Malabu account with then-President Goodluck Jonathan and his Oil Minister Diezani Alison-Madueke allegedly receiving US$466 million of the money. Nigeria's EFCC also filed corruption charges against the oil firms and Etete in March 2017. As in Italy, the Nigerian prosecutors also claimed the former president was complicit in the alleged fraud.
  • Malabu's OPL 245 is considered one of the richest oil blocks on the continent and holds an estimated nine billion barrels of crude. The Nigerian government first awarded the oil block to Malabu in 1998 while Etete was the oil minister who oversaw the process. Malabu had no staff nor assets at the time of the transaction and was believed to have been set up by Etete himself just before the transaction. However, the license was revoked in 2001 by the new government led by Olusegun Obasanjo and the block later resold to Shell. A legal dispute about ownership followed, and in 2011 Shell and Eni agreed to pay US$1.3 billion to the Nigerian government to facilitate a settlement and receive joint ownership.

Outlook

Investigations about OPL 245 will likely continue in the oil giants' home countries Italy and the Netherlands. In the meantime, Nigerian authorities will press on with prosecution having already won a court injunction empowering the government to temporarily take control of OPL 245 until the case is settled. However, corruption cases have progressed slowly since 2015 and prosecutors have struggled to secure convictions. The OPL 245 case may be similarly affected, but the acquittal of a top judge separately accused of corruption was recently appealed, indicating that authorities will be unrelenting with the anti-corruption drive. 

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