Absence of Ministerial Consent Renders Acquisition of OPL 310 Invalid, Court Rules

The Federal High Court in Lagos Thursday dismissed the suit
filed by Lekoil 310 Limited and Afren Investment Oil and Gas
Limited against the Minister of Petroleum Resources, asking the
court to hold and deem as granted, and valid, Lekoil’s 2015
acquisition of participating interest of Afren Oil and Gas in Oil
Producing Licence (OPL) 310.

Also joined as co-defendant in the suit, was Optimum Petroleum
Development Company.

At the last sitting of the court, counsel to the Minister of
Petroleum Resources, Prof. Fabian Ajogwu (SAN), had argued that
according to the Guidelines and Procedures for Obtaining Minister’s
Consent to the Assignment of Interest in Oil and Gas Assets, the
consent of the minister was necessary for the valid transfer of any
interest in any oil and gas assets.

He stated that the purported acquisition of the entire issued
share capital of Afren by Lekoil was invalid for failure to obtain
the minister’s consent.

Ajogwu contended that the Executive Order for the Ease of Doing
Business of May 18, 2017, though made to facilitate ease of
business, could not apply to the application of Afren and Lekoil,
as the application for consent was not only incomplete, but was
made two years before the 2017 Order, adding that the Order could
not retroactively cure the defect. But counsel to the applicants,
Prof. Fidelis Oditah, (SAN), disagreed.

In his judgment, Justice M. S. Hassan upheld the arguments of
Ajogwu, and stated that the consent of the minister is necessary
for a valid transfer of any interests in oil and gas assets.

He added that the said consent cannot be obtained by default as
same must, in his words, be “positive, affirmative and
definite.”

The judge rendered the purported acquisition of the entire share
capital and the resulting participating interest in OPL 310 of
Afren by Lekoil “inchoate and invalid.”

The court also held that the provisions of the Executive Order
of May 18, 2017 for the Ease of Doing Business which was relied on
by Lekoil and Afren could not have retroactive effect and as such
was inapplicable to their application for the consent of the
minister to the purported share purchase transaction.

Justice Hassan concluded that the Guidelines and Procedures for
Obtaining Minister’s Consent to the Assignment of Interest in Oil
and Gas Assets, issued by the Minister of Petroleum Resources
through the Department of Petroleum Resources (DPR) is a valid
subsidiary legislation made pursuant to the powers of the minister
under the Petroleum Act.

The judge in dismissing the suit, restated the decision in the
case of Moni Pulo and Brass Exploration, holding that the
regulation of interests in Oil Mining Licences and Oil Prospecting
Licences are under the strict preserve of the Minister for
Petroleum Resources who is also the President of Nigeria.

He noted that a lack of order in the administration of these
interests would turn the oil and gas industry into “a motor park
full of touts.”