Neconde Launches Arbitration Case Against Shell
Indigenous oil firm Neconde has launched an arbitration case against Royal Dutch, Shell, the West African firm’s chief executive said, alleging the oil major continued to lift crude and failed to remit funds after a lease had been sold.
The oilfield in question, Oil Mining Lease (OML) 42, is also at the centre of corruption allegations. Shell filed a criminal complaint against a former employee in late March over suspected bribes in the $390 million sale of the field.
Neconde CEO Frank Edozie told Reuters the company bought a stake in OML 42 from Shell in April 2011. He alleged the oil giant continued to produce crude there until the petroleum ministry approved Neconde’s licence in November that year.
“It was producing and lifting crude although the asset had, by deed of transfer, moved to Neconde. 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,” he said.
Edozie, who spoke with Reuters at his company’s headquarters in Nigeria’s commercial capital Lagos, said Neconde launched the arbitration case in London late last year in an attempt to recoup money. He did not disclose the sum being sought.
Edozie did not provide precise figures when asked how much crude was allegedly produced, lifted and sold improperly by Shell. A Shell spokesperson said there was “arbitration between Neconde and Shell”. No further details were given. Experts say arbitration disputes, which are held in private, often take years to resolve but can also be withdrawn quickly if a deal is reached privately.
Neconde Energy last week said it purchased its stake in OML 42 following a competitive bidding round and made no payments to a former Shell employee or other companies to facilitate the purchase. A Shell spokesperson said the decision to file a criminal complaint against its former employee over the sale was unconnected to the arbitration case.
Neconde’s CEO also said the company was “under significant pressure to keep up with payments to banks” and was holding talks to restructure its debt and raise equity. “We are looking for between $500 million and $600 million,” said Edozie, adding that the energy firm was dealing with a consortium of lenders.
He said financiers on the OML 42 acquisition included international lenders: Africa Finance Corp, FBN Bank UK, Glencore and Afrexim. Guaranty Trust Bank, Diamond Bank, Fidelity Bank and Access Bank were domestic banks in the mix. Edozie said the company had been in talks with lenders to refinance its loans.
He said the company had recently decided to transport crude by barge because of the disruption caused by pipeline vandalism by militants in the southern Niger Delta, first in 2011 and later in 2016. Nigeria’s Forcados terminal is ramping up after a temporary shutdown on the Trans Forcados Pipeline, Shell said on Friday. “We lost production due to downtime, therefore we felt that we are better off barging than putting our crude in the pipeline,” he said.
By: CHIKA IZUORA