by Steve LeVine

There are always are middlemen, multi-million-dollar fees, meetings in luxury European hotels, and hijinx, because at least one of the parties is usually rough around the edges.

Suppose you want to do an oil deal—a colossal one—in Nigeria. One person you might think of engaging is a Russian middleman named Ednan Agaev, who, judging by an affidavit that he has filed in the New York Supreme Court, seems resourceful, agile and plucky. Agaev made the affidavit because, he says, he arranged a whopper of a deal for Shell and Italy’s Eni last year, a $1.3 billion agreement for an estimated 9-billion-barrel offshore oilfield called OPL 245, but never got his $65.5 million success fee. While we can’t know if Agaev will ever receive his cut, his account opens up how this patch of the business world works.

The story goes back to the 1990s, when a man named Daniel Etete, then Nigeria’s oil minister, was awarded OPL 245. It was a shared holding with Mohammed Abacha, a son of the country’s then-ruler, Sani Abacha. But in 2002, a new Nigerian ruler, Olusegun Obasanjo, said that Etete’s deal was tainted, and re-awarded the block to Shell. That ignited a long business dispute between Etete and Shell that halted work on OPL 245. So it was that, in 2009, Etete brought in Agaev as a skilled middleman who might manage to break the legal logjam. Agaev was to find a third party—another investor—to bridge the distrust with Shell and allow OPL 245 to be developed.

In tackling the assignment, Agaev first had to compensate for the fact that he was Russian—he needed a guide to working this particular task in Nigeria. Finding such a man, he presented him to Etete. According to Agaev’s account, Etete seems to have understood his rationale, and agreed to pay this added employee a $55 million fee. That made for a total of $120.5 million in success fees. So far so good. These sums are within the bounds charged by investment banks.

Finding the partner

The men began working. For his part, Agaev began calling on foreign oil companies with the financial and technical wherewithal to work the field—Russia’s Rosneft, China’s CNPC and France’s Total among them. But none wanted anything to do with the Shell dispute or with Etete, who in 2007 had been convicted by a French court for money laundering.

Agaev got his own insight into their hesitancy when, as part of finding Etete a partner, he requested the seismic maps for OPL 245, the standard data used to appraise a field’s value. According to Agaev, Etete demanded $250,000 plus traveling expenses in Europe in exchange. When Agaev protested, Etete replied that, in Agaev’s words, “he needed money,” and that it would be repaid along with the success fee as part of the final transaction. Agaev says he “reluctantly” provided the cash and got the seismic maps.

Within just months, though, Agaev hit paydirt. The Nigerian representative of Italy’s Eni, the most active major oil company in Africa, expressed interest in OPL 245. Agaev, his Nigerian agent and Etete flew to Milan, where Eni is headquartered. After a meeting with a senior company official, Eni was declared the “preferred investor.”

Tending to the details

Agaev began to prepare the necessary paperwork, and an Eni technical team flew to Houston to look over Shell’s detailed data on OPL 245. Eni now came up with its money offer—$1.3 billion, to be paid on behalf of it and Shell to Etete’s company, Malabu Oil and Gas. Agaev seems to have thought it was a reasonable sum. The goal was to get the deal signed by December 2010 in Milan.

But being a middleman in Nigeria means nursing your client, and according to Agaev’s account, Etete now shifted back and forth as to whether he was happy with the offer. At one point he wrote a letter to Eni and Shell refusing the sum. He told Agaev that he would not pay his Nigerian agent. Shell sought to calm the man, recommending that “he reconsider his position.”

Etete returned to Agaev and said he had conferred with Nigeria’s attorney general. He had been advised to accept the deal and pay everyone their due fees. Agaev suggested that he had received good advice. If Eni backed out, he said, “no one [else] would replace them.” Etete seemed to agree.

A last hurdle appeared. Mohammed Abacha, the son of the brutal late dictator, reappeared and said he was the beneficial owner of the field. Both Shell and Eni now refused to sign anything with Etete. That might have been the end of the road for Agaev—except for a brainstorm. The Russian suggested that the parties rope in the Nigerian government as a protective layer; the government after all was eager to get oil drilling going in OPL 245.

Here is how the new arrangement would work, Agaev said: Nigeria would “take back” Etete’s rights to the field. It would sell the field to the two major oil companies. Then it would simply transfer the proceeds to Etete. The finances could be handled through escrow accounts. Everyone agreed that was a sensible solution. For their trouble, the Nigerians would receive a “signature bonus” off the top amounting to $207.9 million.

In May 2011, the deal was consummated and the cash paid. Etete’s money went to an escrow account at JP Morgan Chase in London, traveling first through the bank’s New York office. It was quite a triumph for Agaev and his Nigerian agent.

Getting paid

Of course it is one thing striking a deal and another getting one’s fee. The following month at the Hotel Bristol in Paris, Agaev asserts, Etete told him that he actually couldn’t afford the success fees. He offered $5 million as a settlement. Agaev refused, and two weeks later filed the affidavit.

Based on my own experiences watching oil deals on the Caspian Sea, Agaev’s description falls neatly into standard practices on the frontier of the global oil patch. There are always are middlemen, multi-million-dollar fees, meetings in luxury European hotels, and hijinx, because at least one of the parties is usually rough around the edges.

The part about the trouble getting paid—that happens fairly often as well. The way the transaction took place—through escrow accounts in big western banking centers—suggest that Agaev took comfort in knowing that, if Etete double-crossed him, he had judicial recourse. Time will tell whether that was a good bet.

The aftermath

Transparency groups such as London-based Global Witness are pushing for an investigation of whether the deal amounted to enabling criminal behavior, since Etete acquired the rights to OPL 245 when he was oil minister. Shell and Eni told me that they struck their deal with the Nigerian government and no one else. Shell said it found no evidence that Etete was involved in the deal at all. “We are open and transparent about all payments to the FGN and how much they were,” Shell said. “In resolving this long-running issue, Shell has not acted in any way that is outside normal global industry practice.” Eni said, “The payments to the Federal Government at the time of the award of the block and the relevant license to Eni and Shell have been made to the Federal Government. Such payments were made in a transparent manner through an escrow arrangement with a major international bank.”

In Lagos, Nigerian Attorney General Mohammed Adoke has confirmed the substance of Agaev’s account. But Agaev’s hurdles to collecting seem to be growing. It turns out that while the money was in fact transferred to a JP Morgan Chase escrow account as stipulated, the account was in the name of the Nigerian government, not Etete’s. The account contained no instructions to deliver it to Etete. So Agaev may be pitted now not against Etete, but against Nigeria. Making it even more complicated, Lagos media report that the money may be already gone—distributed among powerful Nigerians.

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Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.