Nigeria’s Supreme Court halts Chevron oil block sale to Seplat

May 19, 2015 | Legal, Mergers, Acquisitions & JVs, Nigeria

Abuja, Nigeria | – The Nigerian Supreme Court on Monday, ordered Chevron Nigeria Limited not to take any action regarding the sale of the oil mining assets, OMLs 52, 53 and 55 to Seplat Petroleum Development Company, following an appeal by Britannia-U Nigeria Limited.

The appeal was based on the ruling by the Appeal Court vacating an order of interlocutory injunction by the High Court, which had restrained Chevron and Seplat from concluding any deal on the two oil leases.

At the resumed hearing of the matter, the five-man panel presided over by Justice Tanko Muhammad, ordered parties in the matter “to maintain status quo. No party is allowed to take any step that will affect the res (subject matter) of the appeal.”

The apex court reached the decision, following a request by Rickey Tarfa (SAN) and Abiodun Owonikoko (SAN) to argue the appellant’s application for mandatory injunction seeking a reversal of steps already taken by Chevron to sell the disputed oil blocks to Seplat.

In the unanimous decision, the Supreme Court which is Nigeria’s highest court  ordered parties to maintain status quo, pending the outcome of the appeal, which it adjourned to October 6, 2015.

The court had on March 23 adjourned till yesterday to hear the application for mandatory injunction, because the respondents needed time to file their counter affidavit to the appellant/applicants motion and supporting affidavit.

Consequently, the court allowed all parties to file their affidavit and written briefs relating to the mandatory application and fixed May 18, 2015 for definite hearing of the application.

But before the adjournment, Tarfa expressed concern that respondents were taking steps concerning the subject matter and had fixed next month to conclude by awarding the Oil Mining Assets to Seplat.

Although, Dodo and Nwokedi denied Tarfa’s claim, the Supreme Court warmed parties against taking steps that affect the subject matter.

“Parties know better than to do anything to affect the res (subject matter). It is trite law that when a matter is pending, nothing should be done by any party to affect the res. This case is even stronger now that you have an application for mandatory injunction before us. Any party that does anything to a res knows what will be visited upon him,” Justice Muhammad warned.

Trouble started after Chevron offered the oil blocs for sale, inviting bids from interested firms.

The process became mired in controversy after Chevron, in a bid to transparently put the assets through a public bidding process, failed to publicly announce a winning bid, reserve bid and the unsuccessful bids.

It then allegedly turned its back on the highest bidder, Brittania-U Nigeria Limited, and began to deal with Seplat behind the scene.

Brittania-U contested in court Chevron’s action of not declaring it winner after it made a $1.67 billion bid for the three assets. It later revised the amount to $1.015 billion after officials of both companies met in Houston, United States. Seplat, on the other hand, offered $630 million for the same assets.

The undated SPA (estimated to have been prepared around November 4, 2013) was later revised and replaced with a new one dated November 14, 2013. But an examination of the bid process documents showed that Chevron bid rules forbade the forming of consortium after the bid had closed.

Oil industry analysts familiar with this process said even if this were to happen, other participants in the bid ought to have been informed. But Chevron did not.