TUE. 07 MARCH 2023-theGBJournal | State oil company, the NNPC Limited has taken control of the operational and production assets in the oil mining lease 18 (OML 18) formerly controlled by Eroton Exploration and Production Limited.
NNPC non-operating partners, NNPC Limited with 55% stake and OML 18 Energy Limited (OML 18 Energy) with 16.20% evicted Eroton as operator of the Joint Venture (JV) ‘’in line with the provisions of the Joint Operating Agreement,’’ NNPC said in a statement Monday signed by its Chief Corporate Communications Officer, Chief Deen Muhammad.
NNPC Limited and OML 18 Energy further appointed NNPC Eighteen Operating Limited as operator of the JV.
NNPC said the change in operatorship has been notified to the Nigerian Upstream Regulatory Commission (NUPRC) and communicated to EROTON.
While announcing the takeover, NPPC said the reasons for the takeover are compelling, noting that production declined from 30,000 barrels per day (bpd) to zero.
It said ‘’the persisting inability of Eroton to meet the fiscal obligations to the Federal Government led to the sealing of Eroton’s head office in Lagos by the Federal Inland Revenue Service (FIRS) for more than 12 months due to non-payment of outstanding taxes to the Government.’’
According to the NNPC, Eroton is also not able to remit to the JV parties the proceeds of gas supplied to its affiliates, NOTORE. It also noted that a number of audits and investigations, including by the Economic and Financial Crime Commission (EFCC), NURPC’s work programme audit and others have been undertaken or are ongoing.
‘’Some of these audits are regulatory steps that may lead to licence revocation under relevant Laws if drastic steps are not taken by non-operating partners.’’
NNPC Limited, the majority shareholder in the OML with a unique stewardship responsibility to the Federation, said it is committed to assuring that the energy and financial security of the country is uppermost in its business decisions.
‘’Removing an operator in these circumstances is therefore inevitable in order to protect the JV from Governmental or third parties action from entities, including Eroton’s lenders and other service providers.’’
NNPC highlighted that OML 18 is an oil-producing block covering 1,035 square Kilometers located south of Port Harcourt and contains eleven oil and gas fields with 714 million stock tank barrels (MMSTB) of oil and condensate and 4.7 trillion cubic feet (tcf) of natural gas reserves. Eight fields have been developed, but only four are currently producing – Cawthorne Cahnnel, Awoba, Akaso and Alakiri.
In 2014, Eroton acquired the 45% interest previously owned by Shell-30%, Total-10% and NAOC-5% in the then NNPC/SPDC/Total/Agip OML 18 JV.
Following the equity acquisition, Eroton became NNPC’s partner in the OML 18 JV and Eroton was designated as the Operator in accordance with relevant provisions of the Joint Operating Agreement (JOA) between parties.
Subsequently in 2018, Eroton farmed-out part of its equity to OML 18 Energy Resource Limited (16.20%) and Bilton Energy Limited (1.80%).
NNPC says it is currently engaging the relevant stakeholders, including workers unions, communities, amongst others ‘’to restore operations to its full capability and secure value for all partners and the Federation.’’
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