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Court Dismisses Suit Against Minister of Petroleum Resources

Court Dismisses Suit Against Minister of Petroleum Resources

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A Federal High Court sitting in Lagos, yesterday, dismissed the suit filed by Professor Fidelis Oditah, QC, SAN on behalf of Lekoil 310 Ltd and Afren Investment Oil and Gas (Nigeria) Ltd, against Minister of Petroleum Resources, praying the court to hold and deem as granted, and valid Lekoil’s 2015 acquisition of participating interest of Afren Oil & Gas in Oil Producing Licence 310.

Also sued as co-defendant is Optimum Petroleum Development Co.

Counsel to Minister of Petroleum Resources, Professor Fabian Ajogwu, SAN, had argued on February 7, 2019 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 interests in any Oil and Gas Assets, and that the purported acquisition of the entire issued share capital of Afren by Lekoil was invalid for failure to obtain the Minister’s consent.

He 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, and that the Order could not retroactively cure the defect.

Trial judge, Justice Muslim Hassan, in his judgment, upheld the arguments of Professor Ajogwu, and noted that the consent of the minister was necessary for a valid transfer of any interests in oil and gas assets, and that the said consent cannot be obtained by default as same must be “positive, affirmative and definite,” thus rendering 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.

The court noted 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 Affairs 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 court 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 Licenses are under the strict preserve of the Minister for Petroleum Resources (who is also the President of Nigeria), and 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.”

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