Nigeria Orders Shell, Eni to Give Up Oil Block Amid Corruption Probe -- Update

By Sarah Kent and Eric Sylvers 

A Nigerian court has ordered Royal Dutch Shell PLC and Eni SpA to give up control of a large offshore oil block amid an investigation into their acquisition of the asset for over $1 billion, Nigerian authorities said.

The order is the latest development in a saga that has stretched for years across courtrooms in the U.K., Italy and Nigeria in an alleged corruption scandal involving the two oil giants and Nigerian officials and businessmen.

Eni said it was aware of reports about the court order, but the company hadn't received notification to relinquish control of the oil field. It denied any wrongdoing in relation to the acquisition.

A spokesperson for Shell said the company couldn't comment because it hasn't had a chance to review the order.

"We are aware of the Italian Prosecutor's investigation and we hope to show that there is no basis to prosecute Shell," the spokesperson said. "Shell takes this matter seriously and is cooperating with the authorities."

Italian prosecutors say in investigative records viewed by The Wall Street Journal that Eni executives and Shell were allegedly involved in a corrupt scheme to secure the oil block. No charges have been filed.

Shell and Eni gained control of the block in 2011 after paying $1.3 billion, capping off roughly a decadelong ownership dispute between Nigeria's government, Shell and Malabu Oil and Gas, a Nigerian company owned by a former oil minister, Dan Etete. Malabu was assigned the block in the late 1990s when the country was under military dictatorship.

Though the money Shell and Eni originally paid went to the Nigerian government, much of it was later allegedly transferred to Mr. Etete's company and used to pay kickbacks to executives and Nigerian officials, according to an Italian investigation.

A lawyer for Mr. Etete wasn't immediately available to comment. Italian prosecutors aren't investigating Malabu, according to Italian court documents.

Nigeria's financial-crime investigators, the Economic and Financial Crimes Commission, said the Nigerian Federal High Court ordered Shell and Eni's oil license to be turned over to the government "pending investigation and prosecution of suspects" in the inquiry, which it referred to as the "Malabu Oil scam."

The commission sought Thursday's court order as part of its own investigation, according to court documents. Shell and Eni's Nigerian units could face charges of conspiracy, bribery, official corruption and money laundering, according to the commissions' affidavit.

Nigeria's state oil company Nigerian National Petroleum Corp., or NNPC, would be responsible for managing the oil license, according to an oil ministry's spokesman. An NNPC spokesman said the company hadn't yet been served with the ruling and would study the necessary actions once it has been received.

Write to Sarah Kent at [e-mail] and Eric Sylvers at [e-mail]

(END) Dow Jones Newswires

January 27, 2017 15:41 ET (20:41 GMT)

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