Statoil legal challenge in Multi-Million Dollar Abebe Lawsuit

The Norwegian state oil giant contested its case in the Nigerian commercial capital’s Court of Appeal on Monday in a delayed hearing to appeal an earlier judgment against the company in the long-running legal row with consultant and medical doctor Dr John Abebe.

Abebe was hired by Statoil for much of the 1990s, under an agreement with his firm Inducon Nigeria, to advise the company on its upstream business in the West African country, reportedly handing over $2.2 million in fee payments to the consultant.

An independent investigation in 2004 concluded that “Statoil has engaged consultants… on  the basis of their personal relationships and knowledge of the ruling government in Nigeria”, according to Norwegian business daily DN.

However, in February 2010, Abebe – dubbed ‘Mr Statoil’ – filed a lawsuit against the company demanding a 1.5% net profit interest from its oil and gas assets in Nigeria, where it holds a 20.21% stake in the Chevron-operated deep-water Agbami field as well as operatorships of two exploration blocks, OMLs 128 and 129.

According to some reports, the share of Statoil’s profits claimed by Abebe could equate to between Nkr1 billion and as much as Nkr5 billion ($147 million and $874 million).

The company is now appealing against a subsequent decision by Nigeria’s Federal High Court in December 2010 that resulted in an injunction that required Statoil’s earnings from its Nigerian operations to be held in escrow in the country pending resolution of the case.

At the end of 2011, local subsidiary Statoil Nigeria had the equivalent of about Nkr4.3 billion in its accounts in Nigeria, Statoil spokesman Baard Glad Pedersen revealed to Upstream, adding that the injunction has “restricted the company’s ability to freely expatriate funds from the country”.

He said this week’s Lagos appeal hearing “reconfirmed our firm belief that we have a strong legal case and that Mr. John Abebe’s claims are ill-founded and without merit”.

Statoil claims Abebe was given “full remuneration” for consultancy services provided to the company under several written agreements and denies the consultant’s profit interest claim was ever part of the deal.

“Statoil is of the clear opinion that the claim is without any merits and that no agreement to this effect ever has existed with Mr. Abebe or his company Inducon,” the spokesman affirmed.

He further pointed out that the high court ruling did not clarify how a 1.5% net profit interest should be calculated, adding that “it would never equate to even a fraction of the sum” indicated by the consultant.

The company has previously stated that it would not enter into a similar consultancy agreement today.

Statoil last year issued a breach of warranty claim against Abebe and Inducon in Lagos State Court, which is still pending, to claim damages for the filing of the initial lawsuit against the company, despite “having received full remuneration for his historic consultancy services and signed a termination agreement with Statoil to this effect in 1997”.

The company is now awaiting the final verdict by a panel of judges in the appeal hearing, with the spokesman insisting it will defend its position “with all legal means”.