Energy giant Royal Dutch Shell Plc’s Nigerian venture has lost the right to operate an oil site after a court ruled the company wasn’t allowed to renew a lease first granted in 1989.
The court of appeals in Abuja, overturned a 2019 ruling on Monday that granted Shell Petroleum Development Co. the right to renew its operating license for the Oil Mineral Lease 11 field. Those rights will transfer to the state-owned Nigerian National Petroleum Corporation.
Managing director of NNPC, Mele Kyari said in a statement: “This is a huge victory for the government and people of Nigeria as we now have the impetus to responsibly unlock the oil and gas reserves the block offers for the benefit of all Nigerians,”
A spokesperson for Shell said in a statement that the company was dissatisfied by the judgment and subsequently filed an appeal.
“Though we believe the SPDC JV has fulfilled its obligations under the Petroleum Act for the renewal of OML 11, our preference remains to engage the Nigerian authorities on available options for an amicable resolution of issues around the lease,” the spokesperson said.
The decision comes after Shell decided to pay a local community $111 million in a decades-old oil spill dispute related to OML 11. Shell faces lawsuits from Nigeria to Europe claiming environmental damages in the Niger Delta.
The oil major which has pumped oil in Nigeria for half a century says it is in the process of leaving its onshore oil operations in Nigeria because it was no longer is compatible with the company’s long-term climate strategy.
Kyari further stated that any subsequent legal action by Shell would be “futile” given the company’s “inability to work on the Ogoni region of the block for over 30 years.”
The statement further adds that an NNPC subsidiary has taken over the assets, and operations are in full gear.