The non-operating joint venture partners of Oil Mining Lease 18 have appointed NNPC Eighteen Operating Limited as operator of OML 18 to replace Eroton Exploration and Production Limited.
Eroton was removed to curtail further degradation of the asset and revamp the production of oil and gas on it, according to a statement issued in Abuja on Monday by the Chief Corporate Communications Officer, Nigerian National Petroleum Company Limited, Garba-Deen Muhammad
It read in part, “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.”
NNPC stated that 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.
It said 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.
The national oil firm said Eroton was also not able to remit to the JV parties the proceeds of gas supplied to its affiliate, NOTORE, adding that a number of audits and investigations, including by the EFCC, NURPC’s work programme audit and others, had been undertaken or were ongoing.
“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,” NNPCL stated.
It added, “NNPC Limited in particular, as majority shareholder with a unique stewardship responsibility to the federation, is committed to ensuring 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.”
NNPCL said 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.
It said eight fields had been developed, but only four were currently producing, and named them as Cawthorne Channel, Awoba, Akaso, and Alakiri.
In 2014, Eroton acquired the 45 per cent interest previously owned by Shell – 30 per cent, Total – 10 per cent, and NAOC – five per cent, 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 between the parties.
Subsequently in 2018, Eroton farmed-out part of its equity to OML 18 Energy Resource Limited – 16.2 per cent and Bilton Energy Limited – 1.8 per cent.
“From 2016 to date, OML 18’s net crude oil production has significantly fallen from approximately 30,000bpd to zero production, despite consistent compliance to the joint venture’s funding obligations by the JV partners over the same period,” NNPCL stated.
It continued, “In recognition of the impact of the challenges in crude evacuation via the Nembe Creek Trunk Line, the operator proposed, and partners approved an Alternative Crude Oil Evacuation Process by barging. Eroton is unable to execute this alternative, leading to the current zero production status of the asset.
“NNPC Eighteen Operating Limited has taken control of the operational and production assets in the block and is currently engaging the relevant stakeholders, including workers unions, communities, among others, to restore operations to its full capability and secure value for all partners and the federation.”
About two weeks ago, Eroton announced that it remained the operator of OML 18 Alakiri Gas Plant and Field Logistics Base in the Niger Delta.
It stated that it was false for a section of the media to claim that NNPCL had taken over operatorship of OML 18.
“First, it is important to state that Eroton remains the Operator of OML 18. The issue of operatorship of OML 18 is a contractual one and is governed by the joint operating agreement among participating entities,” the firm had stated in a statement.
