Court Orders Renewal of Shell’s Ogoni Oil Field License for 20 years

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Alex Enumah in Abuja

Justice Taiwo Taiwo of the Federal High Court, Abuja Division, yesterday, ordered the renewal for another 20 years of the operating license of Shell Petroleum Development Company (SPDC) in the OML11 field which is in the Ogoni area.

 Justice Taiwo gave the order while delivering judgment in a suit challenging the refusal of the federal government to renew Shell’s License in the said OML 11 oil field.

 The federal government had refused to renew the operating license of the oil giant in the affected oil field on the grounds that the renewal was not in the interest of the country, particularly in the area of national security.

 The FG further argued that renewing the said license for another 30 years was against the spirit and letter of the Petroleum Act, which allows renewal for a maximum period of 20 years.

 The refusal prompted the oil company to approach the court to compel the federal government to renew its oil mining license for the affected oil field, which the company disclosed was renewed for a period of 30 years by the then military administration in the late seventies. 

However, delivering judgment yesterday, the court held that the government was unable to show why the OML 11 license would not be renewed.

According to the judge, the provision of the law made it mandatory for the Minister of Petroleum to grant a renewal of 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 held. 

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

On the number of years sought for by the plaintiff, he said he could not go outside the provision of the law. 

 According to him, Paragraph 10 of the first schedule of the Petroleum Act was very clear.

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

 “This to me, is mandatory,” he said. 

 He also said that 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 metres 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 regard 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. 

 Shell had in suit number: CS/524/19 sought  the intervention of the court over the refusal of the government to renew the OML 11 licence which was due in 2017.

 Sued as defendants are the Minister of Petroleum Resources, who is also President Muhammadu Buhari and the Minister of State for Petroleum Resources as 1st and 2nd defendants respectively.

 SDPC had sought to compel the two ministers to renew OML 11,  in addition to 14 other oil mining leases approved for it in June 30.

 In their defence the defendants through their counsel, Mohammed Diri, told the court that the primary objective of any responsible government was to guaranty the safety of lives and property.

 He said that the refusal to renew OML 11 was a pre-emptive measures to prevent the occurrence or escalation of security breach in Ogoni  area.

 He argued that the OML 11 covered an area of 3,095.25 square kilometers that stretched between Rivers and Imo with 14 oilfields , 10 out of which are located in Ogoni area of Rivers.

 He said that besides the security challenges, SPDC tried 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 in contravention of the (Drilling and Production ) Regulation which limits  the size of OML block to 1.295 square kilometers.(500 miles).”

 The lawyer therefore urged the judge to hold that SPDC suit was destitute of merit and suffered incurable legal deficiency and should be dismissed.