Absence of Ministerial Consent Renders Acquisition of OPL 310 Invalid, Court Rules

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Davidson Iriekpen

The Federal High Court in Lagos Thursday dismissed the suit filed by Lekoil 310 Limited and Afren Investment Oil and Gas Limited against the Minister of Petroleum Resources, asking the court to hold and deem as granted, and valid, Lekoil’s 2015 acquisition of participating interest of Afren Oil and Gas in Oil Producing Licence (OPL) 310.

Also joined as co-defendant in the suit, was Optimum Petroleum Development Company.

At the last sitting of the court, counsel to the Minister of Petroleum Resources, Prof. Fabian Ajogwu (SAN), had argued that according to the Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas Assets, the consent of the minister was necessary for the valid transfer of any interest in any oil and gas assets.

He stated that the purported acquisition of the entire issued share capital of Afren by Lekoil was invalid for failure to obtain the minister’s consent.

Ajogwu contended that the Executive Order for the Ease of Doing Business of May 18, 2017, though made to facilitate ease of business, could not apply to the application of Afren and Lekoil, as the application for consent was not only incomplete, but was made two years before the 2017 Order, adding that the Order could not retroactively cure the defect. But counsel to the applicants, Prof. Fidelis Oditah, (SAN), disagreed.

In his judgment, Justice M. S. Hassan upheld the arguments of Ajogwu, and stated that the consent of the minister is necessary for a valid transfer of any interests in oil and gas assets.

He added that the said consent cannot be obtained by default as same must, in his words, be “positive, affirmative and definite.”

The judge rendered the purported acquisition of the entire share capital and the resulting participating interest in OPL 310 of Afren by Lekoil “inchoate and invalid.”

The court also held that the provisions of the Executive Order of May 18, 2017 for the Ease of Doing Business which was relied on by Lekoil and Afren could not have retroactive effect and as such was inapplicable to their application for the consent of the minister to the purported share purchase transaction.

Justice Hassan concluded that the Guidelines and Procedures for Obtaining Minister’s Consent to the Assignment of Interest in Oil and Gas Assets, issued by the Minister of Petroleum Resources through the Department of Petroleum Resources (DPR) is a valid subsidiary legislation made pursuant to the powers of the minister under the Petroleum Act.

The judge in dismissing the suit, restated the decision in the case of Moni Pulo and Brass Exploration, holding that the regulation of interests in Oil Mining Licences and Oil Prospecting Licences are under the strict preserve of the Minister for Petroleum Resources who is also the President of Nigeria.

He noted that a lack of order in the administration of these interests would turn the oil and gas industry into “a motor park full of touts.”