Nigerian oil company Lekoil will drop legal action against the Nigerian oil ministry in relation to its acquisition of a stake in an offshore block from Afren.
As previously reported, Lekoil, which holds an unconditional 17.14 percent interest in the OPL 310 located in shallow water offshore Lagos, in 2016 bought an additional 22.86 percent interest, from Afren Oil & Gas.
The company, however, has not been able to formally complete the acquisition, as it has not received a response from the Ministry of Petroleum Resources, despite seeking one in 2016.
In March 2016, Lekoil was notified by the Ministry of Petroleum Resources that the necessary due diligence exercise would be conducted that month. The due diligence exercise did not take place and had not been rescheduled by the Department of Petroleum Resources since then.
This led Lekoil to go to court to speed up the process and preserve its license rights.
Lekoil then went to court in 2019. The court in March 2019 ruled that Lekoil’s acquisition of OPL 310 stake had been “inchoate based on the fact that Consent is pending,” meaning that the 22.86 percent participating interest in OPL 310 is still held by Afren until ministerial consent is granted.
Lekoil at the time said it believed it had strong grounds to appeal against this judgment by the Federal High Court; and intended to file a notice of appeal, and a stay of execution of this judgment with the court.
Legal action dropped
Lekoil said on Tuesday that it had received a letter from the Ministry of Petroleum Resources relating to an application for an extension (re-award) to the OPL 310 license.
According to Lekoil, the Letter notes that the OPL 310 license expired on February 10, 2019, “and ownership of OPL 310 has accordingly reverted to the Government in line with Petroleum Act.”
The letter further sets out, Lekoil says, that the re-award will not be considered by the Honourable Minister of Petroleum Resources until such point as the suit filed by Lekoil against the minister is withdrawn by Lekoil and other parties to the action.
Furthermore, the letter says that failure by Lekoil and others to withdraw the suit within thirty (30) days of the Letter – which was dated 8 May 2019, but received by Lekoil on 13 May 2019 – forecloses any consideration of re-award to Optimum Petroleum Development Limited, Lekoil and their affiliates or subsidiaries.
“The company has decided to withdraw legal action. The company will also continue engagements with the regulator and Optimum Petroleum Development Company Limited, the operator of OPL 310, to conclude agreements and resolve all outstanding issues. Further updates will be provided as and when necessary,” Lekoil said.