OPL 245, one of Nigeria’s most controversial oil blocks, has been at the centre of disputes for nearly three decades. Located offshore in the deep waters of the Niger Delta, at depths of up to 2,000 metres, the block is estimated by Shell and Eni to contain between 531 and 560 million barrels of recoverable oil, along with substantial natural gas reserves.
Since its first allocation in 1998, the licence has been mired in conflict, revoked and reassigned, and eventually sold through a $1.3 billion settlement that drew the attention of prosecutors, governments, and civil society worldwide. Allegations of corruption surrounded the deal for years, yet courts in Nigeria, Italy, the UK and elsewhere ultimately acquitted the companies and individuals involved, ruling that the payments were part of a legitimate settlement rather than bribes. The saga nonetheless revealed deep weaknesses in Nigeria’s oil governance and became a case study in the limits of international anti-corruption enforcement.
The 1998 Award and Early Controversy.
The origins of the dispute date back to April 1998, when Nigeria’s military regime under General Sani Abacha awarded OPL 245 to Malabu Oil and Gas, a company incorporated only days earlier. Malabu paid just over $2 million of a $20 million signature bonus and, more problematically, was secretly controlled by Dan Etete, then serving as Petroleum Minister. Subsequent investigations confirmed that Etete held a majority stake through proxies, creating a glaring conflict of interest. Shares were also allocated to members of Abacha’s circle, including the ruler’s son, Mohammed Abacha.
Although the block’s potential was enticing, Shell’s early analysis suggested several hundred million barrels of oil, its allocation to a company tied directly to the minister responsible for awarding licences undermined the credibility of the process and set the stage for years of legal and political disputes.
Revocation and Shell’s Entry.
The return to civilian government in 1999 brought renewed scrutiny. In 2001, President Olusegun Obasanjo’s administration revoked Malabu’s rights to OPL 245, citing irregularities, and reassigned the block to Shell Nigeria Ultra Deep. Shell paid a record-breaking $210 million signature bonus, began exploration, and later confirmed that the block contained around 531 million barrels of recoverable reserves.
Malabu immediately contested the revocation and entered into a prolonged legal battle against both the government and Shell. By 2006, arbitration produced a compromise: Malabu was restored as partial owner of the block, while Shell received compensation in other assets. But Malabu failed to meet its financial obligations under this arrangement, leaving the block in limbo. Shell, which had already spent hundreds of millions on exploration, saw its investment stall.
The 2011 Resolution Agreement
In 2010, Eni joined the fray through its subsidiary Nigerian Agip Exploration, seeking a stake alongside Shell. The Nigerian government, under President Goodluck Jonathan, moved to resolve the longstanding disputes through a settlement. On 29 April 2011, Shell and Eni agreed to pay $1.3 billion, comprising $1.092 billion for Malabu’s relinquished rights and the $210 million signature bonus, into an escrow account with JP Morgan, held on behalf of the Nigerian government.
The government then transferred $1.092 billion to Malabu. Much of this money was subsequently routed through offshore companies linked to Etete and intermediaries, raising suspicions about where the funds ultimately ended up. Shell and Eni insisted that their only responsibility was to pay the Nigerian state, not Malabu, and this argument would later prevail in court.
Investigations and Court Outcomes.
The 2011 deal triggered extensive international investigations. In Italy, prosecutors charged Eni’s then-chief executive Claudio Descalzi, other company officials, Shell executives, and Etete with international corruption. The trial in Milan lasted several years, but in March 2021 the court acquitted all defendants, ruling that no crime had been committed. The acquittals became final in 2022 after prosecutors abandoned appeals.
In the United Kingdom, Nigeria sued JP Morgan for allegedly failing to prevent fraudulent transfers of the settlement money. In June 2022, the High Court dismissed the $1.7 billion claim, concluding that the bank had not acted negligently. The UK Serious Fraud Office also investigated Shell and Eni but ultimately brought no charges.
Within Nigeria, the Economic and Financial Crimes Commission (EFCC) pursued charges of fraud and money laundering against former Attorney General Mohammed Adoke, Etete, and others. However, in March 2024, the Federal Capital Territory High Court acquitted all defendants, criticising the evidence as insufficient. Meanwhile, Nigeria’s civil suit against Eni for $1.1 billion was withdrawn in 2023. By May 2025, the Court of Appeal in Abuja dismissed Malabu’s final lawsuit against Eni, declaring it time-barred and abusive.
Elsewhere, authorities in Switzerland and the United States froze some of the settlement funds in 2014. A portion of these, $78 million, was later returned to Nigeria. The U.S. Department of Justice closed its investigation in 2019 without bringing charges.
Across all jurisdictions, Shell, Eni, and their executives were legally cleared of wrongdoing, though the case highlighted persistent concerns about how oil wealth is managed in Nigeria.
Disputed Issues and Governance Lessons.
Even though courts ruled in favour of the companies, civil society organisations such as Global Witness continued to argue that the deal effectively deprived Nigeria of billions in future revenues. Their calculations suggested losses of between $4.5 and $6 billion compared to more conventional production-sharing agreements, though Shell and Eni strongly contest these figures, maintaining that the terms were lawful and consistent with the negotiated settlement.
Allegations of bribery also remain unresolved in the court of public opinion. While no tribunal found evidence of criminal intent, critics argue that the opaque routing of funds through offshore companies and proxies illustrates how weak oversight can enable corruption risks.
The OPL 245 saga ultimately reinforced the importance of transparency in the oil sector. The Petroleum Industry Act of 2021, passed after years of delay, introduced reforms such as competitive bidding, beneficial ownership disclosure, and tighter anti-corruption clauses. These measures were designed in part to prevent a repeat of the OPL 245 experience.
Author’s Note.
The story of OPL 245 is both a tale of legal exoneration and an enduring lesson in governance. On the legal record, Shell, Eni, and their executives were acquitted in every jurisdiction where they were charged or investigated. Yet the underlying concerns about how Nigeria’s oil blocks are allocated, how revenues are managed, and how institutions safeguard public resources remain unresolved.
For Nigeria, where oil revenues continue to dominate the budget, the legacy of OPL 245 is sobering. Billions of dollars that might have been directed toward development have instead been caught up in disputes, settlements, and allegations. The block itself remains undeveloped as of 2025, symbolising the costs of weak governance in a resource-rich nation.
References:
BBC News. (2021, March 17). Nigeria oilfield deal corruption case ends with acquittals.
High Court of Justice (UK). (2022, June 14). Federal Republic of Nigeria v. JP Morgan Chase Bank N.A. [EWHC 1447 (Comm)].
Premium Times Nigeria. (2024, March 28). Court clears Adoke, Etete, others of OPL 245 charges.
Court of Appeal, Abuja (Nigeria). (2025, May 23). Malabu Oil & Gas v. Nigerian Agip Exploration Ltd & Anor. Case ruling reported by ThisDayLive.
Eni S.p.A. (2025). OPL 245: Eni’s position on the Nigeria case.
