Tribunal awards $1.7b to FG over Brass, Forcados Assets

An arbitral tribunal at the Lagos Court of Arbitration yesterday awarded $1.69 billion in favour of Nigerian Petroleum Development Company (NPDC) Limited in the suit between Atlantic Energy Drilling Concepts Nigeria Ltd, Atlantic Energy Brass Development Ltd and NPDC.

Atlantic Energy Drilling Concepts and Atlantic Energy Brass Development instituted the suit on August 15, 2016, with the NPDC as counter-claimant.

In its ruling, the tribunal dismissed Atlantic Energy’s claims and awarded $1,690,900,391.39, $200,000 and of N1.5 million (as costs) in favour of NPDC by the claimants within 21 days from the date of the ruling for crude oil lifted from OMLs 26, 30, 34 and 42 (Forcados assets) and OMLs 60, 61, 62 and 63 (Brass assets).

The tribunal affirmed all the submissions of the lead counsel to NPDC, Prof. Fabian Ajogwu (SAN) of Kenna Partners that Atlantic Energy was indebted to NPDC for failure of Atlantic Energy and Atlantic Brass to perform their financial obligations under the respective Strategic Alliance Agreements (SAAs).

Babatunde Fagbohunlu (SAN) of Aluko & Oyebode represented Atlantic Energy and Atlantic Brass.

NPDC had entered into several SAAs with Atlantic on April 20, 2011, May 25, 2011 and 2012 for the development and production of hydrocarbon resources with respect to OMLs 26, 30, 34 and 42 and OMLs 60, 61, 62 and 63.

The agreements created obligations for Atlantic to remit to the government the revenues from the crude oil lifted.

Ajogwu, in his submission, relied heavily on the KPMG Audit Report of the crude oil liftings in Forcados assets and Brass assets, and dwelt on the principle of avoidance of unjust enrichment by the Atlantic Energy of the petroleum assets of the government owned NPDC.

This landmark decision, which is one of the single largest awards ever in Nigerian arbitration, also settles the question of impact of non-payment of signature fees on lifted crude oil as well as the principles of unjust enrichment in crude oil lifting and recovery.

The landmark ruling on lost crude oil revenues will strengthen government’s drive to recover other lost or stolen crude over the years.