Eni Slams Arbitration On Nigeria Over Oil Field Dispute

Eni is expected to take over the Indonesian Deepwater Development (IDD) project as operator Chevron sells its interest in the gas venture, the chairman of the country’s upstream oil and gas regulator has said. Chevron confirmed in January its plan to sell its 62% interest in IDD project as the company makes global changes to cut costs and streamline operations. Eni is already a partner in the project, along with China’s Sinopec. SKK Migas chairman DwiSoetjipto told lawmakers that discussions were at the “finalisation process”. “There are many positive aspect to Eni replacing Chevron, such as reducing the size of investment to production facilities and (IDD) can be connected to Eni’s Jangkrik gas field,” he said. Eni did not immediately respond to a request for comment. Chevron declined to give details on the negotiations but said in an e-mail “the project will have value for another operator and the Kutei Basin can continue to be developed safely and responsibly,” referring to the area of the project. The IDD project located in the Makassar Strait, involves the Bangka, which started production in 2016, as well as the Gendalo and Gehem gas fields. IDD in 2019 had an average daily production of 2,000 barrels of liquids and 33 million cubic feet of natural gas, according to Chevron’s website. Dwi did not disclose the estimated value of the deal. SKK Migas last year lowered its peak gas output estimate for the IDD project after Chevron cut investment due to a change in the facility’s design, a regulatory official said. Peak output was expected to reach about 700-800 million standard cubic feet per day (mmscfd), compared with an initial estimate of more than 1 billion cubic feet per day (bcfd), when the remaining two gas hubs start production, the official said. (Reporting by AgustinusBeo Da Costa; Additional reporting and writing by FransiskaNangoy; Editing by Martin Petty)

Eni, an Italian oil major, has filed a request for arbitration against Nigeria at the World Bank’s dispute settlement body and plans to argue that the government of Nigeria’s failure to allow it exploit an oilfield it acquired with Royal Dutch Shell nearly a decade ago breaches their investment agreement, according to court documents.

OPL 245, an offshore field awarded to the two oil companies in 2011, is the subject of multiple court cases worldwide, including a criminal case in Milan in which the Nigerian government alleges roughly $1.1 billion of payments from the companies was siphoned to politicians and middlemen.

But Shell and Eni have denied any wrongdoing.

Eni has submitted a request for arbitration against Nigeria with the World Bank’s International Centre for Settlement of Investor Disputes (ICSID), of which Nigeria is a member state, a posting on ICSID’s website shows, according to Reuters. It shows the case was registered on October but does not give details. Shell is not a party to the request, according to the posting.

An Eni spokesman said the request for arbitration was aimed at protecting its investments and investors, and that it was confident of a satisfactory solution for both parties.

The Italian oil major also filed a request for evidence on October 6 with a court in the U.S. state of Delaware which it says it wants to use in the ICSID arbitration and in the Milan case, according to documents from the court seen by Reuters.

“Specifically, Eni (through its subsidiaries), will contend that Nigeria’s actions violate multiple provisions of the bilateral investment treaty by pursuing a campaign of unfounded claims against Eni and improperly conditioning the conversion of OPL 245 into an OML,” Eni’s filing to the court says.

An oil prospecting license (OPL) allows a company to explore for oil, but once it finds recoverable oil, the license needs to be converted to an oil mining license (OML) for it to be able to produce and export.

Nigeria’s presidency declined to comment when asked about Eni’s court filing and the arbitration case. Neither the attorney general’s office nor the Ministry of Petroleum Resources immediately responded to requests for comment.

In the Delaware court documents, Eni said it believed “third parties” were behind Nigeria’s lack of action on its request to convert OPL 245 into an oil mining license and on its efforts to claim some $1 billion in damages.

The company said it was seeking information from Poplar Falls LLC and private investment management firm Drumcliffe Partners LLC, U.S. companies registered in Delaware, on any agreement they have to fund Nigeria’s litigation efforts.

Asked about Eni’s court filing, Drumcliffe said it was working with Nigeria’s asset recovery agency to recover fraudulent payments made in relation to OPL 245 and that it would “oppose Eni’s efforts to the fullest.”

“What is immediately clear is that Eni is pursuing every avenue to avoid accountability for its role in one of the largest frauds in the history of the oil and gas industry,” Jim Little, principal of Drumcliffe, said in a statement. Reuters could not reach a representative of Poplar Falls for comment.

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