Gas block litigation boils over in court

SUNDAY NEWS Reporter

THE Oil and Gas Giant Conglomerate, Royal Dutch Shell, has pinned down its partner, Ophir Energy PLC, seeking security payments of about 5.2tril/- following a dispute on three gas blocks in Southern Tanzania, pending before the High Court’s Commercial Division.

Tanzanian businessman Moto Mabanga instituted a suit against Ophir Energy PLC, Ophir Services PTY Limited and BG Tanzania Limited, claiming to be expelled illegally from his own established gas exploration deal worth over 13tril/- in gas blocks One, Three and Four.

In the notice to Ophir’s Chief Executive Officer Nick Cooper, Shell’s Company Secretary and Chief Legal Counsel Linda Szymanski, stated that any adverse decision that would be given by the Tanzanian High Court would have adverse impact as well to them.

“Our advice is that Ophir Energy should have special funds set up in special bank account in any globally reputable bank in South Africa, United Arab Emirates or anywhere of your choice, as a surety to Pavilion (Energy Pte) and Shell,” she stated in the notice dated June 14, 2017.

Szymanski explained that such amount could be between 25 to 40 per cent of the actual amount claimed by Mr Mabanga and would act as security so that in case of any judgment that is in favour of the plaintiff, nothing then would go wrong.

“This is taken into consideration if both two scenarios, re-instating of Mr Mabanga’s share or an order to pay him as part of his compensation for his alleged undervaluation of his shares. This special fund can also be in the form of bank guarantee,” she stated in the notice.

Company Secretary and Chief Legal Counsel was hopeful the process should be done at the end of June, pointing out further that generally, when one is in any court case has to be prepared both ways, for worse and good having studied the nature of the case in question.

She further pointed out that after a thorough analysis of various communications, as well as past documented evidences, their position was that any ruling that affect British Gas will also eventually have some negative impacts on Shell.

“Though in acquiring BG and all its assets globally we were given indemnity against any possible legal risk, we still have the right to be kept informed about this matter.

“This is because as I have pointed out earlier so far the disputed assets involved in the Tanzania’s High Court tussle are ours and therefore any decisions which is not in your favour or that of British Gas will affect us jointly with Pavilion,” Szymanski explained.”

According to her, the claims by Ophir that Shell is not in any risk looked good at the face value, but in reality lacks merits because, for instance, should the court decide that Mr Mabanga be returned his free carried shares in the disputed gas blocks, it would be Shell that would suffer.

“(This is) because we are already the legal owner of all Tanzania assets. In fact, the burden should the case re-instate Mr Mabanga as the shareholder in the disputed blocks, will fall on Shell and Pavilion,” she stated.

Szymanski went on stating that they had raised similar concerns with BG and Pavilion, but all of them seemed to suggest that Ophir assured them that Mr Mabanga’s case was just a passing cloud since he was already defeated in the London Court when he tried to raise similar allegations.

“Whether this case is still a passing cloud as you sug gested to BG and Pavilion is not debatable here because so far the suit has proceeded to final stage. What we have here in my view is not a passing cloud, but a legal tussle that if not well handled may have some substantial damages to all of us,” she cautioned.

In the suit, Mr Mabanga seeks appointment of competent International Oil and Gas Experts to determine value of his entitlement in the three gas blocks One, Three and Four in Southern Tanzania.

He claims to be deceived fraudulently to surrender his interests in the blocks and was branded by the Gas companies as a “red flag and obstacle to the transaction.”

According to him, he was coerced to sign a termination agreement to receive undervalued consideration of 7.5 million USD, thus depriving his rights to own property on fair payment and was forced out of the new corporate set up by xenophobic means because he was an African.

Mr Mabanga claims to be ignored by Royal Dutch Shell Chief Executive Officer Ben van Beurden, when his lawyers, led by advocate Gabriel Mnyele, cautioned the Oil and Gas giant conglomerate about his case and interest yet to be determined at the High Court (Commercial Division).