BG Group oil exploration in southern Tanzania.
In what could be seen as a David and Goliath battle, Mr Mabanga says that should the deal proceed as announced two weeks ago, he will seek a court injunction to stop the deal until the current court cases are heard.
Dar es Salaam. Tanzanian fixer and businessman Moto Mabanga is threatening to block the recent $70 billion deal in which Royal Dutch Shell announced it had taken over British Gas.
In what could be seen as a David and Goliath battle, Mr Mabanga says that should the deal proceed as announced two weeks ago, he will seek a court injunction to stop the deal until the current court cases are heard.
The recently announced takeover of BG Group’s operations by Royal Dutch Shell may take longer than anticipated after the he raised legal issues regarding his interests in British Gas.
Mr Mabanga, who claims rights to five per cent in each of BG’s three gas blocks--1, 3 and 4—has served Royal Dutch Shell with a notice threatening legal action should the acquisition proceed without his complaints being ironed out.
Early this month, Royal Dutch Shell announced the takeover of its British rival in a deal worth £47 billion (Sh13 trillion).
“The boards of Shell and BG are pleased to announce that they have reached agreement on the terms of a recommended cash and share offer to be made by Shell for the entire issue and to be issued share capital of BG,” said a statement released by the Anglo-Dutch group.
The handover files may not change hands soon, though. According to a letter dated April 13 and authored by Marando, Mnyele and Company Advocates—who represent Mr Mabanga—and addressed to the CEO of Royal Dutch Shell Ben van Beurden, the Tanzanian claims he relinquished his 15 shares under duress and went to court, meaning the current deal cannot sail through until the case is heard and determined. The letter says:
“We represent Mr M.M. Mabanga in respect to his claim against BG Group and its associates in an action for the return to our client of rights in the seabed off the coast of Tanzania, consisting of 50 per cent in each gas blocks 1, 3 and 4, as well as in respect of a fraud action against BG Group and the Ophir Energy Group. The rights in question contain, embedded in them, rights to a portion of the assets of BG Group.”
The notice informs the company that legal action in respect to the circumstances in which the shares were transferred is pending before the High Court and the Commercial High Court of Tanzania.
The lawyers also pointed out that the takeover discussions between the two companies began about a year ago, when the BG Group and/or BG Tanzania was acting as the managing partner with 60 per cent of gas blocks 1, 3 and 4, Ophir Energy Plc, Ophir Services with 2O per cent and Pavilion Energy with 20 per cent.
In the light of these issues, Mr Mabanga’s lawyers demanded to be told “without delay, and in writing” what actions the BG Group and Royal Dutch Shell had taken to resolve the dispute before the takeover to avoid the interdiction of proceedings.
The notice then warns: “Failing a satisfactory reply, we will be faced with the necessity of approaching the courts for urgent relief to prevent Royal Dutch Shell from taking over from the BG Group our client’s interests in blocks 1, 3 and 4 in Tanzania.”
BG came to Tanzania in 2010 through farm-in by entering into a partnership with Ophir and is the operator of offshore Blocks 1, 3 and 4, in which it has a 60 per cent interest. The company has drilled 14 wells to date and discovered an estimated 15 trillion cubic feet of oil.
BG, Statoil and their block partners signed a memorandum of understanding with the government of Tanzania in April last year for the development of an LNG Plant—a project estimated to cost up to $30 billion—to be developed in partnership with Norway’s Statoil and Exxon Mobil of the United States.
Background
Early last year, Mr Mabanga sued Ophir Energy and British Gas for allegedly locking him out of lucrative deals after he enabled the companies to secure three gas exploration blocks in Tanzania. Mr Mabanga, who lives in South Africa, asked the High Court to declare that the company cheated him into surrendering his 15 per cent interest in three gas blocks located in Mtwara at a throwaway price. He has also sued the company’s subsidiary, Ophir Services, and British Gas Tanzania—which has joint business interests in the Mtwara oil fields.
In a case filed in the commercial division of the High Court, the businessman claims that the $7.5 million offer that the London-based companies paid him for his shares was made in bad faith and was aimed at underpaying him. He also claims the company approached him on March 5, 2010, seeking to buy his interest of five per cent in each of the three blocks.
The businessman says he initially declined the offer but Ophir, through CEO Alan Stein, exerted undue pressure on him and he finally caved in and sold the shares at a low price.
The Ophir Energy and Ophir Services agent reportedly gave Mr Mabanga less than 48 hours to make up his mind. He argues that the offer to buy his interest was made in bad faith, the intention being to underpay him.
Ophir is the biggest oil and gas explorer in the East Africa region. The Tanzanian fields that the firm discovered with its partner BG Group are estimated to hold 15 trillion cubic feet of provable natural gas.
In November 2013, Ophir Energy PLC sold part of a giant natural gas discovery off the coast of Tanzania to Singapore’s state-owned Pavilion Energy for $1.3 billion, the UK-based Ophir said on Thursday.
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