Tinubu Announces ‘Historic’ Deal to End Decades-long OPL 245 Controversy

President Bola Tinubu on Thursday announced the resolution of a decades-long dispute over Oil Prospecting Licence (OPL) 245, one of Nigeria’s most commercially significant deepwater oil blocks.

The presidency said the agreement paves the way for a development that could add approximately 150,000 barrels per day to the country’s production capacity.

Details of the agreement were not made public, but the president’s office described it as a “historic settlement” that would unlock the development of one of Nigeria’s most strategically important deepwater resources.

OPL 245, a vast deepwater offshore asset in the Niger Delta, holds an estimated nine billion barrels of crude and has remained largely untapped for nearly three decades, mired in corruption and multi-jurisdictional legal battles spanning Nigeria, Italy, the United Kingdom, and the United States.

The disputes, centring on the block’s acquisition and ownership, have resulted in court cases in multiple countries between the Federal Government of Nigeria, Shell, Eni, and Malabu Oil and Gas.

Presidential spokesperson Bayo Onanuga said in a statement that the agreement “restores clarity and stability” to an asset widely recognised as one of Nigeria’s most commercially promising deepwater blocks.

The signing was attended by senior representatives of Italian oil giant Eni, including its Chief Executive Officer, Claudio Descalzi; Chief Operating Officer, Guido Brusco; Head of Sub-Saharan Region, Mario Bello; and Managing Director of Nigerian Agip Exploration, Fabrizio Bolondi. Also present was Olu Arowolo-Verheijen, special adviser to the president on Energy.

“With the dispute now settled, the pathway is clear for the Final Investment Decision on the Zabazaba–Etan development, a project capable of adding approximately 150,000 barrels per day to Nigeria’s production capacity and strengthening the country’s long-term energy outlook,” Mr Onanuga said.

President Tinubu described the agreement as a strategic milestone in Nigeria’s economic reform agenda, saying it reaffirmed “the administration’s commitment to resolving legacy disputes, restoring investor confidence, and ensuring that Nigeria’s natural resources deliver sustainable value to the Nigerian people.”

“This resolution sends a clear signal to global investors that Nigeria is prepared to address legacy issues transparently, uphold the rule of law, and create a stable environment for long-term capital,” the president said.

Ms Arowolo-Verheijen said the settlement represented a significant improvement on the 2011 Resolution Agreement, reflecting the policy framework of the Petroleum Industry Act (PIA) and the administration’s broader fiscal and governance reforms in the energy sector.

“The revised terms strike a balanced outcome, providing investors with the clarity and predictability required to proceed with major deepwater investments, while ensuring stronger value accretion and safeguards for the Federation,” she added.

Reuters reported this week that Nigeria had broken OPL 245 into four new assets to be operated by Eni and Shell. The Nigerian government had for years signalled its desire to find a resolution that would bring the block into production.

The presidency said the resolution is part of a wider programme of reforms undertaken since 2023 to restore Nigeria’s competitiveness in global energy markets. “These reforms, anchored in the Petroleum Industry Act and supported by targeted executive actions, have already contributed to renewed investor interest and significant capital inflows into Nigeria’s oil and gas sector,” Ms Arowolo-Verheijen said.

“By resolving the OPL 245 dispute, the Federal Government has removed one of the most prominent legacy risks in Nigeria’s upstream sector and reinforced its commitment to predictable regulation, transparent governance, and commercially viable investment frameworks,” she added.

Background story about OPL 245

OPL 245 was originally awarded to Malabu Oil and Gas by the regime of General Sani Abacha in 1998. Under the terms of the award, Malabu, a briefcase company set up by Mr Abacha’s son and the then petroleum minister, Dan Etete, in controversial circumstances, was required to develop the block in partnership with an international technical partner and to pay a signature bonus of $20 million.

The company paid only $2 million of that sum before entering into a joint operation agreement with Shell Nigeria Ultra Deep Limited (SNUD). Malabu received its operating licence in April 2001, but it was revoked just three months later, in July 2001.

The administration of former President Olusegun Obasanjo then invited ExxonMobil and Shell, Malabu’s own technical partner, to bid for OPL 245 in partnership with the Nigerian National Petroleum Corporation (NNPC). Shell won the bid and began work on the block.

Malabu accused Shell of conniving with the government to seize the block and petitioned the House of Representatives, which directed the federal government to re-award Block 245 to Malabu.

Malabu also approached the Federal High Court in Abuja, but the suit was struck out. While an appeal was pending, the then Minister of State for Petroleum, Edmund Daukoru, sought an out-of-court settlement on behalf of the federal government.

The block’s association with Mr Etete, whom the federal government alleged had awarded the block to himself while in office, inflamed opinion in the Niger Delta, where communities demanded a full audit of oil block allocations and disclosure of the ethnic identities of their owners.

The Obasanjo government eventually reversed course, reclaimed OPL 245 from Shell, and re-awarded it to Malabu, this time on condition that the company pay a new signature bonus of $210 million, in addition to the $2 million already paid in 1998.

Malabu paid the sum and withdrew its court cases, but the settlement created a new problem.

Shell filed for arbitration at the International Centre for Settlement of Investment Disputes (ICSID) in Washington, D.C. and also instituted proceedings at the Federal High Court in Abuja. SNUD, which had entered into a Production Sharing Contract with the NNPC in 2002, had paid $1 million of the $210 million signature bonus and held the balance of $209 million in an escrow account with JP Morgan, pending resolution of the dispute. Shell sought compensation and damages in excess of $2 billion, citing costs incurred in de-risking the block.

Various settlement efforts followed, but none produced a definitive outcome, though a Terms of Settlement Framework was adopted in 2006.

In April 2011, under the Goodluck Jonathan administration, then Attorney-General of the Federation Mohammed Adoke brokered a Resolution Agreement.

Under the agreement signed on 29 April 2011, Malabu agreed to waive all claims to OPL 245 in exchange for compensation from the federal government. Shell, in turn, agreed to withdraw all suits against the government and to pay, through the federal government, the sum of $1.092 billion as full and final settlement of Malabu’s claims. Block 245 would then revert to Shell and its new partner, Italian oil company Eni.

In June 2013, the matter was formally concluded on these terms, and presidential approval was granted for the sum of $1.092 billion to be paid to Malabu, now controlled by Mr Etete after scheming out the Abachas, from the federal government’s escrow account at JP Morgan in London.

Italian Trial and Acquittals

The deal soon attracted international scrutiny. Italian prosecutors alleged that most of the $1.3 billion purchase price for OPL 245 had been siphoned off to politicians and middlemen. PREMIUM TIMES reported how about half of the money was transferred into the accounts of controversial businessman Abubakar Aliyu, who was believed to be a front for senior government officials including Mr Adoke.

Shell and Eni, along with several of their former and current executives — including Eni CEO Claudio Descalzi — faced criminal trial in Italy. All were acquitted in 2021, having denied any wrongdoing.

At home, Mr Adoke was later named in the $1.1 billion scandal. The Economic and Financial Crimes Commission (EFCC) accused him of benefitting fraudulently from the deal he had helped broker as Attorney-General. He was arraigned before the FCT High Court in Abuja in February 2020 on a 40-count amended charge of bribery and related offences, alongside Mr Aliyu, Rasky Gbinigie, Malabu Oil and Gas Limited, Nigeria Agip Exploration Limited, Shell Nigeria Extra Deep Limited, and Shell Nigeria Exploration Production Company Limited.

The EFCC subsequently admitted it lacked sufficient evidence against Mr Adoke, and the court dismissed the charges. In a separate case at the Federal High Court, the EFCC accused Mr Adoke of laundering N300 million, said to be proceeds of bribery. He was discharged and acquitted in that case as well.

In a book published last year, Mr Adoke described the OPL 245 litigation as “as lucrative as OPL 245 itself for lawyers and their allies” during the Buhari administration, and characterised it as “a monumental waste of resources.”

Mr Adoke continues to maintain that no federal government money went missing and that he and others who brokered the 2011 settlement deserve credit for civic patriotism — having saved the government from financial embarrassment caused by its own mismanagement of the original award process.

In his statement on Thursday, Mr Onanuga said President Tinubu’s resolution of the matter was an improvement on the 2011 agreement, although no details were provided.

“The settlement also represents a significant improvement on the 2011 Resolution Agreement, reflecting the policy framework established under the Petroleum Industry Act (PIA) and the administration’s broader fiscal and governance reforms in the energy sector, ” Ms Arowolo-Verheijen, the presidential adviser on energy, was quoted as saying.