Arbitration tribunal awards $1.69bn to Nigerian govt over Brass, Forcados crude oil assets dispute


An Arbitral Tribunal sitting at the Lagos Court of Arbitration has delivered a landmark Arbitral award in favour of the Nigerian government owned Nigerian Petroleum Development Company (NPDC) Limited in the arbitration between the Atlantic Energy Drilling Concepts Nig Ltd and Atlantic Energy Brass Development Ltd and the Nigerian Petroleum Devlopment Company limited.

The arbitral proceedings was instituted by the Claimants (Atlantic Energy Drilling Concepts Nig. Ltd and Atlantic Energy Brass Development Ltd) on August 15, 2016, with the NPDC as Counter-claimant.

In its Award in favour of NPDC, the Arbitral Tribunal dismissed Atlantic Energy’s claims and awarded the sum of US$1,690,900,391.39, US$200,000 and of N1,500,000 (as costs) in favour of NPDC by the Claimants within 21 days from the date of the Award for crude oil lifted from OMLs 26, 30, 34 and 42 (Forcados Assets) and OMLs 60, 61, 62 and 63 (Brass Assets).

The Tribunal affirmed all the submissions of lead counsel to NPDC, Professor Fabian Ajogwu, SAN, FCIArb of Kenna Partners that Atlantic Energy were indebted NPDC for failure of Atlantic Energy and Atlantic Brass to perform their financial obligations under the respective Strategic Alliance Agreements (SAAs).

NPDC had entered into several Strategic Alliance Agreements with Atlantic on April 20, 2011, May 25, 2011 and 2012 for the development and production of hydrocarbon resources with respect to OMLs 26, 30, 34 and 42 (Forcados Assets) and OMLs 60, 61, 62 and 63 (Brass Assets). The Strategic Alliance Agreements, created obligations for Atlantic to remit to the government the revenues from the crude oil lifted.

Ajogwu in his submission relied heavily on the KPMG Audit Report of the crude oil liftings in OMLs 26, 30, 34 and 42 (Forcados Assets) and OMLs 60, 61, 62 and 63 (Brass Assets); and dwelt on the principle of avoidance of unjust enrichment by the Atlantic Energy of the petroleum assets of the Government owned NPDC.

The landmark decision is one of the single largest Awards ever in a Nigerian Arbitration and also settles the question of impact of non-payment of signature fees on lifted crude oil as well as the principles of Unjust Enrichment in Crude oil lifting and recovery.

Furthermore, the significance of this Arbitration to Nigeria which depends mostly on crude oil for revenue generation and economic development is enormous for the Nigerian economy which is heavily dependent on crude oil revenues.

Atlantic Energy & Atlantic Brass were represented by their Counsel Mr Babatunde Fagbohunlu, SAN, FCIArb of Aluko & Oyebode.

Thenewsmatrics reports that the arbitration resolutions stemmed from controversial technical partnerships facilitated by former Minister of Petroleum, Mrs Diezani Alison Madueke and the Atlantic companies controlled by Nigerian businessmen, Kola Aluko and Jide Omokore in which the Federal Government lost billions of dollars in stolen oil revenues.

Both men have been named in graft and money laundering investigations and charges emanating from the deals, conducted under the Goodluck Jonathan administration ostensibly to increase local participation in oil and gas exploration activities.

While Aluko lives in luxurious exile in Switzerland with some of his assets under watch by US and other authorities,  Omokore is facing charges brought by the Economic and Financial Crimes Commission  which have not progressed in the court system.

Alison Madueke is currently facing proceedings aimed at sending her back to Nigeria for procecution from self imposed exile in the United Kingdom following the seizure of unexplained multi-million dollar real estate and other assets traced to her.

Analysts believe that the award on lost crude oil revenues may strengthen the resolve of the Nigerian Government in its drive to recover other lost or stolen crude over the years.

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