THISDAY Guide to FG, P&ID Failed Gas to Power Project

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SPECIAL REPORT

P&ID Conundrum: Navigating Out of the Logjam

In this special report, Davidson Iriekpen, Tobi Soniyi and Obinna Chima, examine the genesis of and collapse of the failed gas to power deal between an Irish firm, Process and Industrial Developments Limited, and the Ministry of Petroleum Resources, on behalf of Nigeria, which gave birth to the raging $9.6 billion arbitral award and recent UK enforcement judgment in favour of the company

The controversy surrounding a recent report that a court in the United Kingdom had ruled that Nigeria must pay a UK firm, Process and Industrial Development Limited (P&ID) the sum of $9.6 billion or have the country’s assets in the UK to the tune of that amount forfeited, over a gas supply and processing agreement (GSPA) contract the country entered with the firm, has continued to generate interest across the world.

The matter is now the cynosure of all eyes as Nigerians and others outside the country are eager to see how it will be resolved.
This is more worrisome, considering that if the judgment is executed and the aforementioned amount is to be paid, the UK firm might walk away with 20 per cent of Nigeria’s external reserves and 2.5 per cent of Nigeria’s Gross Domestic Product (GDP), at a period the country is reeling in fiscal challenges.

The matter became more pronounced when a hedge fund managed company, VR Capital Group, which had knowledge of the matter, in March this year, took as much as 25 per cent stake in P&ID.
Since then, the company has been trying to pull levers of power in the U.S. and the U.K. to make Nigeria settle or, failing that, enable the company to start seizing assets.

Already, presidency hawks are urging the federal government to take stern actions to protect the country’s assets threatened by the hefty award. According to impeccable presidency sources, the actions being proposed include the seizure of Bonga Deep Water Oil Field in which a British company, Shell, has substantial interest as well as other British and Irish businesses.

They drew strength from the interim report of the Economic and Financial Crimes Commission (EFCC) on an investigation it launched on the bad deal in 2015, which found that the contract was neither authorised by President Umaru Yar’Adua nor approved by the Federal Executive Council (FEC) that have the power to seal such a deal.
Besides, the EFCC found that there was collusion between some officials of the Ministry of Petroleum Resources and P&ID to defraud the country.

Consequently, the source at the presidency said the federal government must take actions that would deter the British government from encouraging the attachment of Nigerian assets by demonstrating its willingness to retaliate any unfriendly action, which could include targeting British and other business interests in the country for takeover. Therefore, the presidency, the source said, had consequently directed the Central Bank of Nigeria (CBN) to liaise with the Attorney-General of the Federation (AGF) and Minister of Justice to take all measures to protect Nigeria’s interests, including renegotiation of the award and appeal of the enforcement judgment.

If these fail, said the source, then Bonga and other British as well as Irish business interests in the country that are commensurate to any Nigerian asset attached would be seized.
However, THISDAY spoke to senior lawyers versed in arbitration and International Law who advised the federal government to quickly decide among various legal options available to Nigeria.
On Monday, Vice President Yemi Osinbajo, a learned silk and professor of Law, lead a legal team to meet with a British lawyer, believed to have represented Nigeria in the enforcement proceedings in the US and UK, to find a way out of the logjam.

Background

P&ID commenced the above -mentioned arbitration against the Ministry of Petroleum over an agreement that was described as a Definite Agreement, that was signed on January 11, 2010, for an Accelerated Gas Development in OML 123 and 67, for a period of 20 years.
According to a report, in 2009, the Federal Government of Nigeria signed a Definite Agreement for Accelerated Development Policy with eight companies, one of which was P&ID.

The saga began almost a decade ago. Despite the country’s ample natural resources, Nigeria’s state-owned electric and petroleum companies have struggled to power the country.
To help fix the problem, in 2010, late President Yar’Adua authorised partnership with private companies to develop the nation’s energy infrastructure.
THISDAY gathered that the key players in the P&ID deal included the late Minister of Petroleum Resources, Dr. Rilwan Lukman, who as the Honorary Advisor on Energy and Strategic Matters to the Yar’Adua, ensured that the deal received the attention of the late president.

Others were the then Minister of State (Gas), Chief Emmanuel Odusina; a member of the committee set up by Lukman to facilitate the project, Mr. Mohammed Kuchazi; the shortest serving Group Managing Director of NNPC, Dr. M.M. Ibrahim, the late Mr. Shehu Ladan; the then Permanent Secretary, Ministry of Petroleum Resources, Mr. Goni Sheikh; a former Group Executive Director in charge of Gas and Power at the NNPC, Dr. David Ige; and a former Commissioner of Energy and Mineral Resources under the administration of Mr. Babatunde Fashola in Lagos State, Mr. Taofeek Tijani, who was the Technical Adviser to Lukman.

By the terms of the agreement, P&ID was to build and operate an accelerated gas development project at Adiabo in Odukpani Local Government Area (LGA) of Cross River State.
The agreement required the federal government to supply natural gas from Addax Petroleum-operated Oil Mining Leases (OMLs) 123 and 67 for P&ID to refine into fuel suitable for power generation in the country.
According to the agreement, the initial volume of gas was about 150 million cubic feet of gas per day, which would be ramped up to about 400 million cubic feet per day during the 20-year period.

However, following the inability of the parties to implement the agreement as envisaged, P&ID commenced the above arbitration initially claiming the sum of $1.9 billion against the ministry of Petroleum, and thereafter increased its claim to $5.9 billion, and thereafter submitted another claim of $8.1 billion, before the recent court enforcement judgment.

P&ID’s Case

The Irish firm, in a statement, insisted that the agreement was signed after years of preparation, fieldwork, evaluation and planning on its part.
It insisted that the project only failed when the Nigerian government failed to live up to its end of the contract, namely to supply the gas for processing and building the pipeline it had agreed to construct.
The company said arbitration commenced in August 2012, after it tried in vain to persuade the Nigerian government to honour the deal for more than two years. It said its efforts included the exploration of possible adjustments to the agreement, which P&ID was prepared to accept.

It said: “Since the commencement of the arbitration, P&ID has repeatedly made clear to Nigerian leadership that it is open to a reasonable settlement offer, and Nigeria’s leaders have repeatedly failed to make one. Even after the arbitration tribunal ruled in favour of P&ID, the Buhari administration would not pay the award or make a reasonable settlement offer. As a result, P&ID now is asking the U.S. and U.K. courts for permission to enforce the award.”

The Arbitration

When P&ID declared a dispute and activated the arbitration clause of the contract, the former Attorney General of the Federation, Mr. Mohammed Adoke, engaged the services of Mr. Olasupo Shasore SAN, to represent the federal government, a status report by the Ministry of Justice said.
Shasore raised a preliminary objection, challenging the competence of the action, which was overruled by the arbitration tribunal in its ruling of 3rd July, 2014.

The Ministry of Petroleum Resources also engaged the services of United Kingdom (UK) based law firm, Stephenson Harwood, to apply for extension of time within which the federal government could challenge the arbitration proceeding dated July 2014 in the UK.
Therefore, in 2014, the tribunal rendered a partial award wherein it ruled on the preliminary issues and held that it had jurisdiction in the matter that the seat of arbitration was London, which it then stated was in line with the contract between the parties.
But on the advice of the former Attorney General of the Federation, the federal government opted for an amicable settlement with P&ID.

The President Goodluck Jonathan administration finally settled for $850 million as compensation for the breach of contract but passed payment over to the incoming President Muhammadu Buhari administration.
The new administration also opted for renegotiation and got a reduction of compensation sum of $600m. But details of payment led to the breakdown of that settlement, forcing P&ID back to the arbitration tribunal for determination of the dispute.
In reaction, Nigeria’s UK law firm of Stephenson Harwood LLP applied to a UK court to set aside the award on liability in the UK, but the court dismissed the application on the grounds that the application was filed four months after the expiration of the deadline of such challenges and that the grounds for appeal had no merits.

Thereafter, Shasore applied two weeks later to the Federal High Court in Nigeria, which issued a 3-page order in 2016, setting aside and/or remitting for further consideration or part of the liability award.
By this time, the tribunal had already issued a procedural order affirming London as the seat of arbitration and further stated that the failure of federal government to satisfy its contractual obligation constituted a repudiation of the 2010 agreement and adjourned its proceedings for hearing on quantum of damage.

After the hearing on liability, wherein the tribunal gave a part final award holding the Ministry of Petroleum Resources (MPR) liable in breach of the contract, MPR forwarded the case file to the HAGF/MJ to take over the matter for effective handling.
At this stage the Buhari administration instructed Chief Bolaji Ayorinde SAN, to take over in 2016 to handle the hearing on quantum of damages after the tribunal had found the FGN liable for damages. Upstream Commercial Advisory Limited was also engaged as federal government’s forensic expert.

In its final award on 31st January, 2017 but released on 10th February, 2017 the tribunal awarded the claimant the sum of $6.597 billion plus interest at the rate of seven per cent, from 20th March 2013.
This award, the tribunal said, represented the present value of the 20 years income P&ID would have received for the sale of the Natural Gas Liquid (NGL), minus capital and operating expenditures the company would have incurred in the course of building and running the facility.
But the Nigerian nominee on the tribunal, Chief Bayo Ojo, issued a dissenting award, saying P&ID ought to have mitigated its loss and cannot sit and fold its arms for 20 years expecting a windfall from the government.
He said P&ID was only entitled to damages for three years of operation and should, therefore, receive only $250 million.

After the Award

Upon being served with the final award in February 2017, the AGF on 17th March, 2017, sent a letter to the vice president, suggesting recommendations that would resolve the matter.
In his response on 18th April 2017, the vice president approved the recommendations of the AGF, which included a negotiation of the award with the P&ID.
Based on the vice president’s approval, the AGF and then Minister of State for Petroleum Resources (MSPR) and their delegation along with the federal government’s counsel, Ayorinde, on 16th May, 2017 met with representatives of P&ID and its counsel to negotiate the award.

The negotiation meeting was very successful given that the FGN team was able to negotiate the award from $8.4 billion to $600 million on the following terms:
a. $100 million was agreed to be paid to P&ID within 14 days by the federal government after execution of the Stay of Enforcement of Award Agreement.
b. The outstanding sum ($500 million) was to be paid through an asset that would be determined by the Minister of Petroleum Resources.
The reason for the foregoing decision was arrived at then, considering the fact that the Minister of Petroleum Resources was supposed to make available the money and assets mentioned in the negotiation.

Breakdown of $600m Settlement Deal

But when the AGF forwarded draft settlement to the P&ID, the company rejected it on the ground that what was agreed on for execution was a Draft Stay of Enforcement Agreement and not a Settlement Agreement as proposed by the Federal Government.
Based on the rejection, a letter was written by the AGF on 3rd November 2017, to the vice president seeking approval to re-negotiate the award with the P&ID. The approval of the VP was received on 7th December, 2017 and same was communicated to MSPR and the federal government’s counsel.

The government’s counsel, thereafter, responded on 19th February, 2018, stating that the request to re-negotiate the award was communicated to the P&ID, which appeared no longer interested in the negotiated settlement arrived at on 16th May, 2017.
He further stated that the P&ID had proceeded to instruct its counsel to approach the court without further notice to the federal government to recover the judgment debt and would only consider a pure settlement of the award.
The P&ID further proposed another option which included that the federal government should accept service of court processes in respect of the enforcement proceedings; and the federal government upon acceptance of the court processes, should make a substantial down payment against the outstanding sums due under the award, and in return P&ID would agree to a temporary stay of such court proceedings to allow for a chance for a full resolution of the matter.

The Dispute Escalates

Owing to the breakdown in negotiation, the P&ID in April 2018 began enforcement proceedings in the United States of America against the Ministry of Petroleum Resources, now claiming $9.6 billion.
In response, the AGF engaged the American law firm of Curtis, Mallet-Prevost, Colt & Mosle LLP to represent the interests of the Federal Government of Nigeria and Ministry of Petroleum Resources in the proceedings.

In the US proceedings, the P&ID filed for entry of default on 4th June, 2018, which was entered as a clerk’s entry of default on 5th June, 2018. It was, however, noted that the clerk’s entry of default was not a default judgment but a mere notice of an application for a default judgment.
In response to the petitioner’s application for default judgment, the federal government’s counsel on 12 June, 2018 filed a motion to set aside the clerk’s entry of default for defective service, which was conceded to by the petitioner and it applied to the court to cure the deficiency by serving a fresh process on the Ministry of Foreign Affairs and Ministry of Petroleum Resources through courier or normal mail.

The law firm engaged in discussion with the P&ID counsel, Kobre & KIM LLP, and proposed that a meeting should be held with the P&ID counsel and federal government delegation so as to discuss the settlement of the matter.
The government had proposed 12 and 13th July 2018, for the meeting with the P&ID counsel in New York, which THISDAY gathered was approved by the P&ID counsel and the president.
Meanwhile the president had on 26 June 2018 directed the Minister of State for Petroleum Resources and the AGF to ensure efforts were made by the federal government’s engaged solicitor, Curtis, Mallet-Prevost, Colt &Mosle, to seek ways of protecting the interest of the country in the enforcement proceedings.

The MSPR and AGF were also to reopen negotiations with P&ID, with a view to arriving at a settlement in the neighbourhood of $250million in line with the recommendation and dissenting view of the Nigerian appointed arbitrator, Ojo.
The settlement could be in the form of cash and marginal oil and gas field or cash only.
Part of the settlement plan then was for the MSPR and AGF to submit the draft settlement agreement with P&ID for the president’s consideration before it is finalised; the Minister of Finance to pay the sum of $100million into an escrow account to indicate the seriousness of the government to negotiate a settlement, but with the condition that no amount should be paid out of the escrow account until Mr President has approved the settlement agreement; the MSPR and AGF to provide all the necessary information, documents and support to Economic and Financial Crimes Commission to enable a thorough investigation of the circumstances surrounding the agreement and the subsequent events; and the Group Managing Director of NNPC was then expected to submit a comprehensive dossier to the president on the role of NNPC in the execution and failure of the agreement.

Others included that the AGF should urgently review the lapses in the agreement with P&ID, which led to the award, and to recommend how this could be avoided in the future for the president’s consideration and further directives and that the Director-General National Intelligence Agency (NIA) was to investigate the company P&ID with a view to uncovering the identities of all the promoters, directors and shareholders of the firm.

Nigeria’s Stance at The Meeting

Nigeria then was favourably disposed to a settlement of the dispute at a reasonable sum and had secured the approval of the government thereon.
The Nigerian government had stated that it would not consider a stand-still agreement, but would rather favour payment of a reasonable sum in full and final satisfaction of the claim. The government then stated that it would only consider monetary payments to P&ID, and in this regard offered $250 million to P&ID which was rejected by the firm.
Thereafter, the federal government through it counsel challenged the District Court’s jurisdiction in the United States, urging the District Court to dismiss P&ID’s petition.

The position of the government in the United States proceedings was to resist enforcement of the award on the basis that Nigeria as a sovereign state has an absolute right to obtain an authoritative determination of its sovereign immunity.
The government then demanded that the jurisdictional issue must be conclusively resolved before Nigeria may be required to litigate the merits of P&ID’s petition.
But the firm had challenged Nigeria’s position, urging the District Court to direct Nigeria to file both its jurisdiction and merit defenses as a consolidated defense so the proceedings may be disposed by the District Court summarily.

The federal government, however, pursued the validity of its jurisdictional defense as a preliminary matter, which must be conclusively resolved prior to any consideration of the merit argument up to the Court of Appeal.
In a ruling on 9 October 2018, the District Court granted a stay of proceedings pending a determination of the appeal.
P&ID subsequently filed motions to have Nigeria’s appeal certified as frivolous and to have proceedings in the District Court continue pending determination of the appeal at the Court of Appeal.

On 1st November 2018, the US District Court issued a decision in favour of FGN denying P&ID’s further attempt to certify Nigeria’s appeal as frivolous and denied P&ID’s attempt to lift the stay of proceedings.
Also, on 15 February 2019, the Court of Appeal issued a decision in favour of FGN by dismissing P&ID’s motion requesting the court to dismiss Nigeria’s appeal for lack of jurisdiction or to summarily affirm the scheduling order of the District Court.

The UK Commercial Court Judgment

Bugged down by Nigeria’s legal challenge to its enforcement proceedings in the US, P&ID approached a commercial court in the UK for a similar proceeding.
The 21st May, 2019 fixed for hearing on the merits of the application for permission to enforce the award was adjourned at the instance of the court due to “Judicial Availability” to 14th June, 2019.

In defending the merits of the award, the government relied on expert reports analysing the damages given to the P&ID wherein it stated amongst others that the damages were clearly unreasonable, manifestly excessive, exorbitant and went far beyond any legitimate protection of the commercial interest of P&ID.
On 16 August, 2019, the UK Commercial Court recognised the Arbitral Award. However, the enforcement of the award cannot take place immediately because the judge ordered that enforcement can only begin after a further hearing on the matter and a date was yet to be fixed for that. The date will most likely be after the court vacation in September.

ADDAX Petroleum Connection

THISDAY learnt that it was the withdrawal of Addax Petroleum Development Nigeria Limited from the project that stalled the deal and fuelled the arbitration.
It was further learnt that when the administration of former president, Chief Olusegun Obasanjo, proposed the idea of constructing a wet gas processing plant to supply gas to the gas-fired power stations across the country, the initial plan was to build the gas facilities in Badagry area of Lagos State.

However, due to the large volume of gas being flared by Addax Petroleum in the company’s Oil Mining Lease (OML) 123 in Adanga area of Cross River State, the project was shifted to Calabar, Cross River State, to utilise the flared gas.
Addax Petroleum is the operator of the Adanga offshore asset under a Production Sharing Contract (PSC) arrangement with the NNPC.

It was learnt that as the discussions between the federal government team and P&ID team reached advanced stage, Addax Petroleum was invited to one of the meetings held in 2009 between the government and the Irish-owned firm, shortly before the contract was signed in January 2010.
Addax Petroleum was said to have agreed to supply 100 million standard cubic feet of gas per day (MMSCF/d), which the Chinese-owned energy giant was flaring from its OML 123.
P&ID was said to have received allocation of land from the Cross River State Government at Adiabo in Odukpani Local Government Area of the state.

However, a 24-inch, 107-kilometre pipeline network had to be built to take gas from Addax’s OML 123 in Adanga to Calabar, where P&ID was billed to build the gas processing facility.
The gas pipeline, it was learnt, was also to supply gas from the Addax’s offshore platform to the 561-megawatt capacity Calabar Power Station being built then under the National Integrated Power Project (NIPP) by the Niger Delta Power Holding Company (NDPHC) Limited at Ikot Nyong, near Calabar.

An indigenous company has since successfully executed the construction and installation of the Adanga-Calabar Gas Transmission Pipeline and Metering Station for the NDPHC Limited to facilitate gas supply to the Calabar Power Station.
But before the completion of the Adanga-Calabar pipeline contract, Addax Petroleum was said to have told the other stakeholders in 2011 that it would not be able to provide the required wet gas for Phase 1 of the P&ID project because it would also require a certain volume of lean gas for reinjection into OML 123.
THISDAY gathered that this development effectively breached the agreement between the federal government and P&ID on gas supply to the Irish-owned firm.

It was learnt that even when the other stakeholders had proffered alternative solutions, Addax Petroleum withdrew totally from the deal in June 2012.
When contacted yesterday, the oil company promised to respond but did not do so as at press time.
It was, however, gathered that NNPC’s lack of commitment to fund the project made Addax, which was the PSC contractor to the corporation, to pull out.
A source told THISDAY that NNPC was simply unable to fund the project because it had no cash even as he added that Nigeria’s woe was compounded by a conspiracy among the oil majors to withhold investment in domestic gas to power project in order to leave Nigeria perpetually at their mercy.

FG’s Case

When the judgment became an issue of public interest the federal government at a press conference addressed by the Minister of Information and Culture, Alhaji Lai Mohammed, in company with Malami; Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed; and Central Bank Governor, Mr. Godwin Emefiele, assured Nigerians that the country’s foreign assets were not in imminent danger of seizure.
Mohammed said the deal with P&ID was fraudulent and that Buhari had directed the Economic and Financial Crimes Commission (EFCC), Nigerian Intelligence Agency (NIA) and the Police to investigate the troublesome transaction.
Emefiele said the deal violated rules for foreign transactions and that there was no evidence of investment inflow from the company into the country at the apex bank.
Malami said the contract was flawed having not received appropriate approvals from the president or the Federal Executive Council. He said the government was mounting legal challenges to the award and would appeal the enforcement judgment in the UK.

Nigeria’s Options

Lawyers, who spoke to THISDAY on the way forward for Nigeria, outlined two main positions: negotiate the award or challenge it at the enforcement proceedings in the US and UK.
Former Attorney-General of the Federation and Minister of Justice, Mr. Michael Aondoakaa,
who held sway when the contract was signed, disowned it and said he was not aware of the deal.
He said Nigeria should not only purse the appeals in the US and the UK, but that the EFCC should also investigate the deal and bring to book all its perpetrators, including the promoters of the company.

But two arbitrators, Mr. Chikwendu Madumere and Ms. Remi Awe, who spoke separately with THISDAY were of the view that no amount of merry-go-round would save Nigeria from the judgment debt.
Madumere, a chattered arbitrator and Chairman of the Abuja Chapter of the Chattered Institute of Arbitrators advised Nigeria to learn from other countries that had had similar experience.
He cited the experience of Egypt after the Arab Springs. According to him, Egypt was inundated with several arbitral awards in huge sums.
He said: “What did Egypt do? It sat down with the companies in whose favour the awards were given to negotiate. The parties eventually agreed on amounts to be paid to liquidate the arbitral awards.
“Similar things had happened in Argentina. Argentina also sat down with the parties and negotiated
“The best way to go is not to be hostile. We have to sit down and negotiate.
“It is painful, it should not have happened but we are beyond that point now. It is too late. All that is left is to sit down with them and talk.

“It could have been worse if not that we have a seasoned arbitrator, who is also a former Attorney General of the Federation, among the panel.”
Awe, a fellow of the Chartered Institute of Arbitrators also advised the federal government to negotiate with P&ID.
According to her, “Unfortunately at this stage, it’s too late to say the agreement was made with the connivance of some people in order to rip the government off as being alleged now.
“The only option now is to negotiate as an award has already been given and the government was well represented at the sittings”, she said.

According to her, the case clearly shows how seriously the Nigerian government should view agreements made.
She noted that there was always an option to appeal an arbitral award, its success, she said, could not be guaranteed.
She advised government to “look critically at the award and make the better of the options of either negotiating or appealing, bearing in mind that the interest continues to accrue while the matter is on appeal.”
She warned that if Nigeria’s assets were seized based on this judgment debt, Nigeria could not retaliate by seizing British assets in Nigeria “because this is not a case between governments. It’s purely a commercial transaction between a UK company and the Nigerian government.”

Awe also explained that foreign parties and companies that entered into contracts with the Nigerian government or companies insisted on the seat of arbitration to be outside Nigeria because they preferred the legal systems of those countries.
“They know there won’t be delays and the judicial systems are not corrupt,” she added.
A senior lawyer, Prof. Fidelis Odittah SAN, said Nigeria needed to exhaust the appeal process even though he did not think Nigeria would get commercial court’s permission to appeal.

On the quantum of the award, the silk also a Queens Counsel (QC), said it appeared excessive but that that by itself was not a ground for challenge.
“I note that Nigeria did not challenge any of the facts/expenses alleged by P&ID,” he said.
Odittah agreed with Awe that Nigeria had no recourse against the UK or its assets. “The UK did not make the award. The UK courts are independent and it would be difficult to see what wrong the UK did because it’s courts adjudicated a dispute between Nigeria and P&ID.”

He explained: “In any event, Bonga is not an asset of the UK. It is owned by Shell, Total, NNPC and perhaps others. I know of no basis that Nigeria could seize Bonga or any other asset.”
Former president of the Nigerian Bar Association (NBA), Mr. Olisa Agbakoba, SAN, advised the federal government to exhaust all legal options at the appellate level to reduce the judgment debt. He said while the award is excessive and unreasonable, there was still need to dialogue with the P&ID for a negotiation of the award.
“I don’t see why Nigeria will retaliate. The award is in the realm of private contract. The BP issue was states’ affair. They are completely two different issues. Seizing assets such as Bonga oil field would have major repercussion at the international oil market that would affect Nigeria.”
The former NBA boss advised that another way to get out of the controversy is not by prosecution, as this would have grave consequences for the country.

“Let the government first take steps to avoid enforcement by exhausting the appellate process,” he further stated.
In order to forestall P&ID-like situations in the future, Agbakoba advised Buhari to issue an Executive Order for the establishment of a national arbitration policy. He said had the federal government heeded the advice to establish the policy over the years, the P&ID imbroglio would not have arisen.

The senior lawyer argued that creating national arbitration policy in the country would ensure that Nigeria’s interests are protected in its commercial relationships with foreign investors.
“Going forward, I suggest that we establish a national arbitration policy, represented by an enactment of an Executive Order that will commence the process and procedure of creating the policy. This will ensure that Nigeria’s interests are protected in its commercial relationships with foreign investors,” he said.

A renowned oil and gas lawyer, Mr. Uche Nwokedi SAN, dismissed the pressure on the federal government to seize the Bonga Deep Water Oil Field in which a British company, Shell, has substantial interest, as well as other British and Irish businesses as a way of taking stern actions to protect the country’s assets threatened by the hefty P&ID award, saying they are separate corporate personalities.

He explained: “They are separate legal personalities. You cannot ordinarily visit the burden or liability of a case upon another party who is not a party to that case.
“So you cannot take over assets like Bonga. The Petroleum Act is very clear about revocation of oil mining leases. When the Federal Government acquired the assets of British Petroleum in 1979, it was under a military government and it had to pass a decree to do that.

“The facts and circumstances are different today. The Bonga is operated under a PSC, which means that the assets actually belong to Nigeria. Consequently, you cannot say that the Bonga is UK asset. In any case, Shell is incorporated in Nigeria and pays taxes here, so it’s a Nigerian company and must enjoy the protection of the law in Nigeria. They would have a valid claim against Nigeria. What’s their business with P&ID?”
From the utterances of Mohammed and the meeting Osinbajo held with the legal team on Monday, Nigeria might be considering a combination of negotiation and legal challenge to the enforcement proceedings in the US and the UK.