Court stops Chevron from Sale of oil blocks to Seplat Petroleum, others

Chevron_Logo17 December 2013, Lagos – A Federal High Court sitting in Lagos has issued an interim junction restraining Chevron Corporation of the United States and its Nigerian subsidiary, Chevron Nigeria Limited (CNL), and their agents from negotiating the sale of Oil Mining Leases (OMLs) 52, 53 and 54, with Seplat Petroleum Development Company (SPDC) Limited or any other bidder, apart from Brittania-U Limited.

The court, presided over by Justice M. N. Yunusa, also issued an injunction restraining Chevron and its agents from declaring Seplat Petroleum Development Company or its agents as the preferred bidder for the oil blocks, apart from Brittania-U Limited, which emerged the highest bidder in the transaction.

The injunction against Chevron followed a court action by Brittania-U, alleging that CNL and Chevron USA have been working behind the scenes to ignore the result of the competitive bid conducted for the sale of Chevron’s 40 per cent interest in the three oil blocks.

The court also ordered Chevron not to execute a definite agreement or any other agreement with Seplat or any other bidder, apart from Brittania-U.

Joined in the suit were CNL, Chevron USA, BNP Paribas Securities Corporation, Mr. Hermant Patel and Seplat Petroleum Development Company Limited.

Brittania-U emerged as the highest bidder, offering $1.015 billion, while Seplat and its partners came second with an offer of about $900 million.

THISDAY gathered that although Chevron acknowledged Brittania-U as having submitted the highest bidder, the company refused to provide a formal letter to Brittania-U.

The transaction assumed a curious twist, when Chevron, through its General Counsel, Mr. EN Mojuetan, wrote to Brittania-U on December 5, 2013, stating: “Chevron has the right to engage or negotiate with any party, including by changing the bidding procedures at anytime.”

A Chevron top official, who was not happy with what he called his company’s decision to change the goal post, told THISDAY that the letter conveying Chevron’s decision to change the bid process came two-and-a-half months after the closure of the bid.

“The letter was written after Brittania-U had been verbally informed of its winning bid and made to provide evidence of bank guarantees from Nigeria and abroad, and made an initial payment of $250 million through a letter of credit that is still with Chevron,” he said.

It was also gathered that Brittania-U has been involved in meetings and communication with Chevron and its agents in the past two months as the recognised highest bidder and has been requesting any form of letter from Chevron to no avail.

After waiting for the formal letter without success, Brittania-U, on 6th of December, 2013, declared a dispute with Chevron Nigeria and through its lawyers wrote Chevron accordingly, accusing it of acting in contravention of international best practices and standards in such matters and transactions, including its own information memorandum on the sale of the three Nigerian assets.

An official of Brittania-U, who preferred to remain anonymous, also said as a law abiding company, it had expected Chevron to do the right thing formally by declaring it as the winner of these assets.

“Unfortunately, Chevron reneged on this pledge; rather they went behind to deal with Seplat and others at a meeting held in London on October 31, 2013, which is a fraud, yet the President of Chevron invited Brittania-U’s management and its bankers for a meeting at Chevron Corporation on November 14, 2013.

“It should be noted, that nowhere in the world will the government or the national oil company of any responsive country allow such reckless behaviour from a multinational operating in their country. It is only in Nigeria that such can be done without any repercussion,” the company said.
Brittania-U was said to have resorted to the court action after a recent meeting on November14, this year, which was at the instance of the President of Chevron Corporation, Mr. Ali Moshiri, who directed Brittania-U to come with their bankers —First Bank of Nigeria Plc, Diamond Bank Plc and Ecobank Nigeria Limited — and their lawyers, as well as their firm board commitment letters, that the banks were ready to fund Brittania-U’s bid.

Brittania-U argued that they were made to provide firm board commitment letters which is as good as cash, even though it was not part of the bid process as published by Chevron.
In attendance at the said meeting were the Chevron team of Messrs Hemant Patel, Matthew Steele and Norman Hanson, while the Brittani-U team was led by their Chairman/CEO, Mrs. Uju Ifejika, with executive directors from the three banks.

Brittania-U submitted its firm board commitment letters for the new revised bid sums of $1.015 billion, which was still higher than that of the consortium of Seplat, Amini Petroleum and Belema Oil, which offered a total bid of $900 million, according to information from Venture Africa report.

It was gathered that Patel, who chaired the meeting, in the presence of everyone at the meeting, promised to send the revised Sales and Purchase Agreement (SPA) for the three OMLs to Brittania-U within 48 hours, upon final review by the Legal Department of Chevron.

However, Chevron through Patel wrote Brittania-U on November 18, 2013, to indicate that Brittania-U omitted in their submission, their individual amounts that made up the revised bid of $1.015 billion.

But Brittania-U was said to have promptly provided Chevron with the information the same day and was acknowledged by Chevron on November 19, 2013.
Having met all the requirements of the bid process, Brittania-U alleged that Chevron refused to give it an award letter, as the successful bidder of the three blocks, hence the court action.

– Ejiofor Alike, This Day

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