Nov 21, 2023

Italian oil company Eni has temporary halted arbitration regarding an oilfield dispute with the Nigerian government, buying time to discuss the conversion of a licence from prospecting to one for production, sources with direct knowledge of the matter told Reuters.

Eni confirmed the suspension of the arbitration at the World Bank’s dispute settlement body regarding the OPL 245 oilfield, considered to be potentially the biggest oil block in the country.

“Eni … has agreed with the Federal Government of Nigeria to mutually and temporarily suspend the arbitration proceedings in order to discuss with the government the necessary steps for achieving the conversion of the licence from prospecting into mining (extraction),” an Eni spokesperson told Reuters.

The move comes days after Nigeria started withdrawing civil claims totalling $1.1 billion against Eni related to allegations of corruption in the OPL 245 deal.

An oil prospecting licence (OPL) allows a company to explore for oil, but once it finds recoverable oil, the licence needs to be converted to an oil mining licence (OML) for it to be able to produce and export.

Eni’s request to halt the arbitration came on Nov. 16, a few days after the start of the proceedings, the sources said, adding that Nigeria is currently seeking better conditions than those discussed until now regarding the block licence.

The federal government of Nigeria was not immediately available to respond to a Reuters request for comment.

Eni and Shell were awarded rights for an offshore field known as Oil Prospecting Licence (OPL) 245 in 2011, but the area has never been exploited as it became subject to multiple disputes that are now coming to an end.

In 2022, a Milan appeals court confirmed the acquittal of Eni, its chief executive and Shell over a corruption case revolving around the acquisition of OPL 245.

The first signs that Eni and the Nigerian government were moving to resolve their remaining disputes emerged on Oct. 15, at the start of a preliminary hearing in a Milan court on an alleged fraud over a failed 2019 Eni tanker deal.

Eni then withdrew its complaint for fraud against the Nigerian company Oando and its former head Boyo Omamofe.

At a hearing earlier in November, an Italian judge decided to drop proceedings for all defendants saying that the alleged crimes were possibly committed abroad and so did not fall within his jurisdiction.

On Sept.4, Eni had agreed to sell its Nigerian onshore subsidiary to Oando. The deal is subject to local and regulatory authorisation.

REUTERS