The case of Nigeria's OPL 245: What's the deal for oil majors?

The long-running saga over control of Nigeria's OPL 245, believed to be the biggest source of untapped oil reserves on the African continent, has again come to the fore, with oil majors Shell and Eni potentially facing legal action over its acquisition.

The block's oil reserves are estimated at 9 billion barrels, about a quarter of Nigeria's total proven reserves. There is also an unspecified, but apparently large, amount of natural gas.

The license lies in about 2,000 meters of water and was discovered in 1998, at a time when Nigeria was still under military rule, and when deepwater production was only just becoming commercially viable.

OPL 245's fate has been mired in dispute and disagreement ever since. The license was originally awarded to Malabu Oil and Gas, which was led by the then Nigerian oil minister, Dan Etete.

The Nigerian oil industry may have huge problems today, but it is less likely that such a deal would be struck now. Malabu needed an international oil company to develop the block and looked to Shell.

After years of disagreement and intrigue, in 2010, Shell and Eni eventually agreed to pay $1.3 billion to take a 50% share each, drawing up plans to develop the deepwater Etan and Zabazaba fields.

The government and the oil companies involved hoped this would be the end of the matter, but if anything the controversy has only increased since then.

Dutch police began a bribery investigation and Nigeria's Economic and Financial Crimes Commission asked the Nigerian courts to freeze control of the asset this January.

In April, the UK's broadcaster the BBC stated that it had "seen evidence that top executives at Shell knew money paid to the Nigerian government for a vast oil field would be passed to a convicted money launderer. It also had reason to believe that money would be used to pay political bribes."

Etete had previously been convicted of money laundering by a French court. Courts in Italy are considering whether to prosecute Eni, Shell and 11 of their current or former executives for alleged corruption relating to OPL 245.

Abuja, the IOCs and most other stakeholders in the industry are keen to see the focus of the Nigerian oil industry move further into the deepwater arena, owing to the level of petro-crime around the onshore and shallow water fields of the Niger Delta.

President Muhammadu Buhari has promised to tackle corruption in Nigeria, so settling this case is a major test of his presidency.

But discovering the truth about OPL 245 looks likely to require an international effort, one that will further delay development of one of Nigeria's most important oil assets.