Shell Rattled by Restrictions on Bank Accounts, Moves to Vacate Order
There are strong indications that last Tuesday’s injunction of a Federal High Court, Lagos, barring Royal Dutch Shell’s Nigerian subsidiary from withdrawing money at 20 local banks until it ring-fences potential damages in a lawsuit brought against the oil major by Aiteo Eastern E&P is already rattling the oil firm.
The interim Mareva injunction is aimed at recovering the cash value of more than 16 million barrels of crude allegedly diverted by the oil giant from the indigenous oil company, AITEO.
However, SPDC is said to have mandated its lawyers to work round the clock in order to get the injunction vacated when the court proceeding resumes next Wednesday.
Although a source from SPDC clarified yesterday that 15 out of the 20 banks so identified had since declared that their names were listed in error, since they were not holding any account of the SPDC, it was gathered that the freezing of the oil firm’s account in the other five banks is already threatening its operations.
According to the source, “there is no way such restraining order will not affect the company’s activities. It is bound to affect its activities because bills have to be paid and such hold on the company’s account would affect its commitment to its business partners.”
Consequently, SPDC’s lawyers are said to be working round the clock to ensure the injunction is vacated on Wednesday in order to bring about a smooth running of the company.
Although the spokesperson for SPDC, Mr. Bamidele Odugbesan, said the company was working to secure an expeditious discharge of the freezing injunction which it alleged was obtained by Aiteo without any valid basis, however, he did not disclose how the company would do so.
Court documents seen by Reuters show that Aiteo is seeking compensation over what it said was the poor condition of the pipeline and associated lost oil sales.
Aiteo is seeking about $4 billion in total over alleged problems with the Nembe Creek Trunk Line (NCTL) pipeline it bought from the Anglo-Dutch group in 2015 and over claims Shell undercounted its oil exports.
Aiteo also accuses Shell of deliberate improper metering of the Nigerian company’s oil exports from the Bonny Light terminal. It is seeking $2.7 billion over the pipeline deal plus $1.28 billion for lost oil sales, the court documents show.
Odugbesan said the allegations are “factually incorrect”.
Aiteo declined to comment on an ongoing legal case.
A statement by the SPDC spokesperson explained: “The claims underpinning the interim freeze order obtained by the plaintiff, Aiteo Eastern E&P Company Limited, relate to the sale of the interests of SPDC and two other SPDC JV partners in the Nembe Creek Trunk Line (NCTL) and OML 29 to Aiteo in 2015; and crude reallocation programme between injectors into the SPDC JV’s Trans Niger Pipeline and injectors into the Aiteo NCTL which is a normal industry practice.
“The crude theft/diversion allegation is also factually incorrect. This is a distinct issue that relates to the directive by the Department of Petroleum Resources to SPDC as operator of the Bonny Oil and Gas Terminal, an asset belonging to the SPDC Joint Venture, to implement a crude re-allocation programme between injectors into the SPDC JV’s Trans Niger Pipeline and injectors into the NCTL.”
Justice Oluremi Oguntoyibo, while giving the interim Mareva injunction, directed the banks where the Shell companies operate accounts in Nigeria to “ring-fence any cash, bonds, deposits, all forms of negotiable instruments to the value of $2.7 billion and pay all standing credits to the Shell companies up to the value into an interest yielding account in the name of the Chief Registrar of the court, who is to hold the funds in trust” pending the hearing of the motion and determination of the motion on notice for interlocutory injunction filed before it by AITEO.
AITEO, alongside some other indigenous oil producers, have had a protracted dispute with Shell alleging that the company shortchanges them using the unapproved methodology to calculate the volume of crude it lifts on their behalf from the terminal. They jointly allege that Shell deploys underhand practices including using unapproved meters to facilitate crude theft.
Following an investigation into the dispute by the Department of Petroleum Resources (DPR), Shell in a letter to the agency, admitted that it had indeed installed unapproved metering systems and agreed to refund more than two million barrels of crude it had illegally taken from the producers (Belema Oil, AITEO, Eroton and NewCross) between 2016 and 2018.