Oil Prospecting Licence (OPL) 245 covers a defined deep-water offshore area (over 1,000 m bsl), approximately 150 km off the Niger Delta.

OPL 245 does not grant the right to exploit any acreage, but provides an opportunity to explore the area. This activity required significant investments – amounting to several hundred million euros – and will require further investments worth billions over a number of years to come before having any chance to proceed with full-scale oil production activities. To date, not a single oil barrel has been drilled.

The acquisition of OPL 245 Block by Shell and Eni has been the subject of incorrect and speculative interpretations since 2011. In particular, there are at least seven incorrect aspects dealt with both by NGOs - which filed petitions with the Court and the Supervisory Authorities, and by certain news media. These interpretations are intended to contest Eni’s probity and transparency.

A fair financial offer

• The final price paid by Eni to acquire the exploration rights for the block was fair and reasonable in the light of a number of factors:
• The characteristics of OPL 245
• The terms of the contract
• The development of the Nigerian and international oil market over previous years

The final amount paid by Eni to the Federal Government of Nigeria (FGN), calculated upon the outcome of a detailed appraisal of geological, technical, and financial considerations, also took into account the development of the Nigerian and international oil and gas market over the years.

Moreover, the transaction price of $1.09 billion, net of the signature bonus, equals the assessment of OPL 245 made by IHS for Shell in its 2009 arbitration against the FGN, when the British/Dutch company had no interest whatsoever in underestimating the asset to which it was laying claim.

More specifically, according to OpenEconomics, with the investment’s internal rate of return (IRR) at 11.5 per cent, the value of the agreement lies between the minimum amount acceptable to the FGN ($1.241 billion) and the maximum amount payable by the license holder ($2.307 billion), thus just below the median value. With an IRR of 12.5 per cent, the value is somewhere between the aforementioned minimum and a maximum of $1.929 billion, well above the median value.

The legal process in Italy

At Eni’s request in 2014, the American law firm Pepper Hamilton LLP – specializing in anti-corruption matters – and an American forensic investigation company reviewed the procedure followed, the negotiations conducted, as well as the contract signed for the acquisition of OPL 245. Both investigations were completed in 2015 and confirmed the operation was legal.

However, in December 2017 five of Eni’s top managers, two of whom are no longer in charge, were committed for trial. The trial began on 5 May 2018 and is still in progress before the Court of Milan. At the hearing, the defence and Eni’s expert witnesses demonstrated that the company operated with fairness in its acquisition of OPL 245.

Here are the final steps of the legal proceedings before the Court of Milan:

• 30 January 2020: The prosecution case against Shell and Eni is substantially based on statements made by the defendant Vincenzo Armanna, a former Eni manager dismissed in 2013 following a dispute over expense claims. Armanna claimed that $50 million in kickbacks had been paid to Eni senior managers, as reported to him by Nigerian intelligence officer Victor Nwafor. Summoned as a witness in court, the latter flatly denied Armanna’s claim. Armanna then asked to call a “second Victor”, but the judges rejected his request. Supported by the public prosecutor, Armanna then returned to the fray with a “third Victor”, whom he identified as his true source. The Court heard this witness’s evidence on 30 January, 2020. However, the “third Victor” (whose real name is Isaac Eke) also denied Armanna’s claims. At the same hearing, it was also found that Armanna had lied about the number of passports available to him (he had three, not one, valid over the period concerned) for the purpose of making it difficult to trace his trips to Nigeria. Also at the hearing of 30 January, 2020, Salvatore Castilletti, the former head of the AISE [External Intelligence and Security Agency] in Abuja, cited by Armanna as a person informed about the facts, denied he had ever been aware of the OPL 245 operation.
• 6 February 2020: The Court rejected as irrelevant the Public Prosecutor’s in extremis attempt to summon Piero Amara, Eni’s former external legal affairs advisor, a prior offender and under investigation in another case. The prosecution had taken up Armanna’s allegations that Amara was able to provide information on purported attempts to influence the Court in the current proceedings.
• 22 May 2020: the High Court of Justice in London, UK, denied its jurisdiction over the OPL 245 case and rejected the lawsuit filed by the Federal Government of Nigeria. The Italian courts therefore remained the sole authorities in charge of the claim.

Eni is now awaiting the Court’s verdict, on completion of the Public Prosecutor’s closing arguments, the plaintiffs’ statements, and the closing statements of the defence. Eni trusts that the truth will soon be established, not least because the prospecting licence for Block 245 expires in 2021 and the Nigerian Federal Government has not yet converted its prospecting licence into an oil mining lease (OLM). Not a single oil barrel has been drilled to date.

KeyFacts Energy: Eni Nigeria country profile