NNPCL replaces Eroton as new operator of OML 18

Nigerian National Petroleum Company Limited and OML18 Energy Limitedtwo non-operating partners of Oil Mining Lease 18, was announced safe from Eroton as a joint venture operator in accordance with the provisions of the Joint Operating Agreement (JOA).

Garba Deen Muhammad, NNPCL’s chief corporate communications officer, in a statement on Monday said the move was to reduce the degradation of the assets and restore oil and gas production.

The partner appointed NNPC Eighteen Operating Limited as the new operator, the statement said. Both entities together hold 71.2 percent equity in the JV.

“The change of operator has been reported to the Nigerian Upstream Regulatory Commission (NUPRC) and communicated to Eroton,” NNPCL said.

“While the main business reasons behind the change in operator are interesting, the publicly available information is that production has dropped from thirty thousand barrels per day (30,000 bpd) to zero.”

The statement explained that Eroton’s inability to meet the federal government’s fiscal obligations resulted in the sealing of Eroton’s headquarters in Lagos by the Federal Inland Revenue Service (FIRS) for over twelve months for non-payment of outstanding taxes. to the government.

He added that Eroton was also unable to deliver to the JV party the gas results it provided to its affiliate, Notore.

He said several audits and investigations, including by the EFCC, the NURPC work program audit and others have been conducted or are ongoing.

“Some of these audits are regulatory measures that may lead to revocation of licenses under relevant laws if drastic measures are not taken by non-operating partners.

“NNPC Limited in particular, as the majority shareholder with a unique stewardship responsibility for the federation, is committed to ensuring that the energy and financial security of the country is uppermost in its business decisions,” it added.

The statement explained that the removal of the operator in these circumstances is unavoidable in order to protect the JV from the actions of the government or third parties from entities, including Eroton’s lenders and other service providers.

OML 18

NNPCL said OML 18 is an oil producing block covering an area of ​​1,035 square kilometers south of Port Harcourt. It contains oil and gas fields with approximately 714 Million Stock Tank Barrels (MMSTB) of oil and condensate and 4.7 trillion cubic feet (tcf) of natural gas reserves.

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The statement said eight fields have been developed, but only four are currently producing, including Cawthorne Channel, Awoba, Akaso, and Alakiri.

He said in 2014, Eroton acquired a 45 percent interest previously owned by Shell (30 percent), Total (10 percent), and NAOC (5 percent), in the NNPC/SPDC/Total/Agip OML 18 JV. .

He added that after the equity acquisition, Eroton became NNPC’s partner in the OML 18 JV and Eroton was appointed as the operator in accordance with the relevant provisions of the Joint Operating Agreement (JOA) between the parties.

Next, he said in 2018, Eroton issued part of the equity to OML 18 Energy Resource Limited and Bilton Energy Limited.

He said that from 2016 until now, the production of OML 18 crude oil has decreased significantly from about thirty thousand barrels per day (30,000 bpd) to zero production, although it is consistent with the joint venture funding obligations by the JV partners during the same period.

“In order to understand the impact of the challenges in the evacuation of crude oil through the Nembe Creek Trunk Line (NCTL), the operator proposed, and the partners approved an alternative crude oil evacuation process by barging.

“Eroton is unable to implement this alternative, resulting in the current zero asset production status.

“NNPC Eighteen Operating Limited has taken control of the operational and production assets in the block and is now engaging relevant stakeholders, including trade unions, and communities, among others to restore operations at full capacity and secure value for all partners and the federation. , ” he said.