A Nigerian energy company Neconde Energy Limited has launched an arbitrary case against British Dutch multinational oil and gas company Shell over the continuous lifting of crude and failure to remit funds after the lease had been sold to Neconde.
“It was producing and lifting crude although the asset had, by deed of transfer, moved to Neconde,” said Frank Edozie, Neconde’s CEO, in an interview with Reuters. “Shell lifted the crude and held the proceeds – nothing was given to Neconde. That is the matter we are taking to the court of arbitration in the UK.”
The oilfield in question, Oil Mining Lease (OML) 42, which is also in a center of corruption allegation, was sold to Neconde by Shell in April 2011. A criminal complaint was also filed against a former Vice-President of Shell in Nigeria, Peter Robinson, in late March over suspected bribes in the $390 million sale of this same field.
According to Reuters, Neconde Energy said it purchased its stake in OML 42 after a competitive bidding round and made no payments to a former Shell employee or other companies to facilitate the purchase.
Edozie further told Reuters that Neconde owes between $500 million and $600 million and is “under significant pressure to keep up with payments to banks.” This is because Neconde got funds from a number of financiers in order to acquire OML 42.
The financiers include Africa Finance Corp, FBN Bank UK, Glencore, Afrexim Bank, Guaranty Trust Bank, Diamond Bank, Fidelity Bank and Access Bank.
In order to recoup the money owed to these financiers, Neconde launched the arbitration case in London. It has refused to disclose the sum being sought and how much crude was allegedly produced, lifted and sold improperly by Shell.
“We are in the market for debt, then we are on a journey to proof of the asset,” Edozie said.
A Shell spokesperson said there was “arbitration between Neconde and Shell” but no further details were given.
Arbitration disputes are held in private and often take years to resolve but can also be withdrawn quickly if a deal is reached privately.