Arbitration Tribunal Awards $1.69bn to Nigerian Govt Over Brass, Forcados Crude Oil Assets

An Arbitral Tribunal sitting at the Lagos Court of Arbitration
has delivered a landmark Arbitral award in favour of the Nigerian
government owned Nigerian Petroleum Development Company (NPDC)
Limited in the arbitration between the Atlantic Energy Drilling
Concepts Nig Ltd and Atlantic Energy Brass Development Ltd and the
Nigerian Petroleum Devlopment Company limited.

The arbitral proceedings was instituted by the Claimants
(Atlantic Energy Drilling Concepts Nig. Ltd and Atlantic Energy
Brass Development Ltd) on August 15, 2016, with the NPDC as
Counter-claimant.

In its Award in favour of NPDC, the Arbitral Tribunal dismissed
Atlantic Energy’s claims and awarded the sum of
US$1,690,900,391.39, US$200,000 and of N1,500,000 (as costs) in
favour of NPDC by the Claimants within 21 days from the date of the
Award 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 lead counsel to
NPDC, Professor Fabian Ajogwu, SAN, FCIArb of Kenna Partners that
Atlantic Energy were indebted NPDC for failure of Atlantic Energy
and Atlantic Brass to perform their financial obligations under the
respective Strategic Alliance Agreements (SAAs).

NPDC had entered into several Strategic Alliance Agreements 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 (Forcados Assets) and OMLs 60, 61, 62 and 63
(Brass Assets). The Strategic Alliance 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 OMLs 26, 30, 34 and 42 (Forcados
Assets) and OMLs 60, 61, 62 and 63 (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.

The landmark decision is one of the single largest Awards ever
in a Nigerian Arbitration and 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.

Furthermore, the significance of this Arbitration to Nigeria
which depends mostly on crude oil for revenue generation and
economic development is enormous for the Nigerian economy which is
heavily dependent on crude oil revenues.

Atlantic Energy & Atlantic Brass were represented by their
Counsel Mr Babatunde Fagbohunlu, SAN, FCIArb of Aluko &
Oyebode.

Analysts believe that the award on lost crude oil revenues may
strengthen the resolve of the Nigerian Government in its drive to
recover other lost or stolen crude over the years.