New Telegraph

OML 18: Why we replaced Eroton – NNPCL

The Nigerian National Petroleum Company Limited (NNPCL) has said that it has replaced Eroton Exploration and Production Limited as operator of OML 18 with NNPC Eighteen Operating Limited. It said the action was to curtail further degradation of the asset and revamp the production of oil and gas on it. It alleged that Eroton was not able to remit to the JV parties the proceeds of gas supplied to its affiliate, NOTORE. It also accused Eroton of persistent inability to meet the fiscal obligations of the Federal Government.

These were contained in a statement by the Chief Corporate Communications Officer, NNPCL, Garba-Deen Muhammad. It said: “In order to protect the joint venture investment in OML 18, the non-operating partners, NNPC Limited (55 per cent interest) and OML18 Energy Limited (16.20 per cent interest), jointly owning 71.2 per cent equity, removed Eroton as operator of the JV in line with the provisions of the Joint Operating Agreement. “NNPC Limited and OML 18 Energy further appointed NNPC Eighteen Operating Limited as operator of the JV. The change in operatorship has been notified to the Nigerian Upstream Regulatory Commission and communicated to Eroton. “While the key business reasons that made the change in operatorship were compelling, it was publicly available information that production had declined from 30,000 barrels per day to zero.

“The persisting inability of Eroton to meet the fiscal obligations of the Federal Government led to the sealing of Eroton’s head office in Lagos by the Federal Inland Revenue Service for more than 12 months due to non-payment of outstanding taxes to the Government.” It said that a number of audits and investigations, including by the Economic Financial Crimes Commission (EFCC), Nigerian Upstream Petroleum Regulatory Commission’s (NURPC) work programme audit and others had been undertaken or were ongoing. According to it, some of these audits are regulatory steps that may lead to licence revocation under the relevant laws if drastic steps are not taken by non-operating partners. It stated that NNPC Limited in particular, as a majority shareholder with a unique stewardship responsibility to the federation, was committed to ensuring that the energy and financial security of the country is uppermost in its business decisions. It said: “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. “It was important to highlight that OML 18 was an oil-producing block covering 1,035 square kilometres located south of Port Harcourt and contained 11 oil and gas fields with about 714 Million Stock Tank Barrels of oil and condensate and 4.7 trillion cubic feet of natural gas reserves.

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