Nigeria seeking to overturn US$11B judgment to company that told court it lost profit in failed gas project

Jan 26, 2023 News

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Kaieteur News – Nigeria is now looking to overturn a US$11 billion damages judgment that was awarded to a company for the loss of profits as a result of a failed gas project in the African nation.

A lawyer representing Nigeria told London’s High Court on Monday that Process & Industrial Developments (P&ID), a British Virgin Islands-based company obtained the gas project contract, “by telling repeated lies and paying bribes to officials.” The lawyer also said that Nigeria was a victim of a campaign of bribery and deception.

According to Premium Times, the P&ID controversy dates back to January 2010, when the company signed a gas supply and processing agreement with the Ministry of Petroleum Resources on behalf of the Nigerian government. Under the terms of the agreement, P&ID was to build and operate an Accelerated Gas Development Project – while the Nigerian government was to source natural gas from oil mining leases operated by Addax Petroleum and supply to P&ID to refine into fuel suitable for power generation in the country.

However, it was stated that the company alleged that after signing the agreement, the Nigerian government defaulted on its obligation after negotiations. P&ID said that the failure to construct the pipeline system to supply the gas frustrated the construction of the gas project, thereby depriving it of the potential benefits from over 20 years’ worth of gas supplies.

The company had filed a lawsuit against Nigeria and had won a US$6.6 billion judgment. However, with interest the judgment debt has now reached US$11 billion – which is around 30 percent of Nigeria’s foreign exchange reserves, according to Reuters.

Premium Times reported that on Monday, at the start of an eight-week trial in London’s high court, Mark Howard, a lawyer representing Nigeria, told the court that P&ID obtained its contract “by telling repeated lies and paying bribes to officials.” As a result, the lawyer claimed that P&ID “corrupted” Nigeria’s lawyers to obtain confidential documents during the arbitration,” Reuters reported.

Howard noted in court documents that P&ID paid bribes and relied on false evidence “to dupe (Nigeria), the tribunal and this court into giving P&ID an extraordinary amount of money on the back of a campaign of bribery, corruption and deception”.

The company, however, said the gas processing agreement was “a genuine contract which P&ID genuinely wanted to perform”.

In court documents, P&ID lawyer, David Wolfson, said Nigeria’s loss in the arbitration “had nothing to do with any corruption”. Notably, Wolfson made opening arguments on behalf of P&ID on Tuesday. In his arguments, Wolfson rejected Nigeria’s bribery claims.

While Nigeria is seeking to overturn the US$11 billion judgment debt as a result of a failed gas project – Guyana is pursuing a US-multi-billion Gas-to-Energy (GTE) project with American oil giant, ExxonMobil.

While industry experts have raised concern about the project – Guyana’s President Irfaan Ali, as well as Vice President Bharrat Jagdeo, have touted the project as ‘transformational’ for the Guyanese citizens.

Importantly, while the project is one of the largest in Guyana’s history, multiple questions linger over the project.

Just recently, this publication reported that the Irfaan Ali Administration has said that the cost for the GTE project, to be set up at Wales, is US$759 million. But what it has not been frontal in saying is how much of this massive sum will be funded with a loan. The Government intends for $134.7B (US$646M) of the cost of this project to be handled through foreign financing, specifically from the United States of America, according to budget documents.

Notably, little is said about the additional work to be done that will drive the cost up further.

Some $24.6B was expended to meet start-up costs associated with the project last year. This year, the Government budgeted $43.3B for the project. It plans for most of this to come from the monies it will approach the US for. Construction on the project is expected to begin this year on the US$2B project. The Government hired CH4-Lindsayca to handle the natural gas-fired power plant and natural gas liquids plant. ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), is responsible for the pipeline, which will cost more than US$1B, to be funded with cost oil. The Environmental Protection Agency (EPA), after reviewing the Environmental Impact Assessment (EIA), has given the go ahead to all parties.

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• gas project, judgment, lawsuit, Nigeria, Oil and Gas

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