South Atlantic Petroleum Limited v. The Minister Of Petroleum Resources (2023)

LAWGLOBAL HUB Lead Judgment Report – SUPREME COURT

CHIMA CENTUS NWEZE, JSC (Delivering the leading judgment)

The Federal Government of Nigeria, through the Minister of Petroleum Resources, by a letter dated February 23rd, 1998, awarded an Oil Prospecting Licence (OPL), covering an area of 1000 square miles, known as ‘OPL 246’, for a statutory five-year tenure, to the appellant, herein.

The appellant’s license was, further, extended for another tenure of five years, by a letter dated November 12th, 2002. It was, therefore, due to expire on March 28th, 2008.

The said OPL 246 entitled the appellant to an exclusive right to the exploration and prospecting of commercial quantities of crude oil found in the designated area and to convert same into an Oil Mining Lease (OML). This is by virtue of Regulation 2

(1) Oil Prospecting Licences (Conversion to Oil Mining Leases, etc.) Regulations, 2004. Furthermore, that upon the grant of an Oil Mining Lease (OML) to the holder of an Oil Prospecting Licence (OPL), the grantee or holder of the OPL, is taken to have mandatorily relinquished the unconverted part or residue of the OPL to the Federal Government.

Upon discovery of oil in commercial quantity, the appellant, by a letter dated March 8th, 2004, applied to the Department of Petroleum Resources for the conversion of the eastern portion of the said OPL 246 to an OML.

The Department of Petroleum Resources, by its letter dated February 21st, 2005, approved the conversion of the eastern portion, which constituted fifty percent of the total area of OPL 246, to OML and designated the new block as ‘OML 130.’ I note here that, by law, the maximum size of an OML is 500 square miles. The OPL 246 covered an area of 1000 square miles.

Again, the appellant, by its letter dated June 27th, 2005, applied for an ‘additional’ OML deriving from the remainder of the OPL 246. The Department of Petroleum Resources, by letters dated March 1st, 2006 and March 21st, 2006, respectively, informed the appellant that its application was not approved by the Government. It requested the appellant to commence relinquishment process of the unconverted portion of OPL 246 to the Government.

In May 2006, the DPR then sought to auction the unconverted portion for OPL 246 for sale to third parties, among which included the second and third respondents.

Meanwhile, the appellant filed an ex-parte application for leave to apply for judicial review before the Federal High Court, Lagos Judicial Division, on May 4th, 2006. This application was granted. The trial court ordered that the application be brought by way of originating motion and the leave shall operate as a stay of actions relating to OPL 246. In the relevant words of the trial court, per Mustapha, J:

(2) That the application shall be by originating motion and same shall be served on the respondent as well as ONGC Mittal, Global Steel Holding, INC Natural Resource Expl, China National Petroleum Corporation, Clean waters Consortium, Transnational Corporation, NAOC/Lotus, ONGC Videsh, BG/Sahara, Niger Delta United Oil Company and CPL/ Starcase Energy within 5 (five) days from today;

(3) The grant of this leave shall operate as a stay of all actions connected with or relating to the Oil prospecting license 246 (OPL 246) and that the auction of the said Oil Prospecting License 246 (OPL 246) scheduled for 19/5/2006 or any other date is hereby stayed pending the hearing and determination of the application for judicial review.

Accordingly, the appellant commenced action by way of originating motion filed on May 10th, 2006. It sought various reliefs to the effect that its rights and interests in OPL 246 remain extant until March 2008, notwithstanding the grant of OML 130 out of OPL 246. It further claimed that the said letters asserting the mandatory relinquishment or forfeiture of the unconverted portion of OPL 246, were unlawful, null and void.

In reaction, the first respondent filed a notice of preliminary objection on May 15th, 2006, challenging the competence of the suit. The ground was that the relief sought was for an order of certiorari to quash the decisions of the Minister complained of in the said letters. As such, the suit ought to have been commenced within three months of the accrual of the cause of action as required by order 47 rule 4 (2) of the Federal High Court Rules.