NNPC Limited has removed Eroton as the operator of the JV in line with the provisions of the Joint Operating Agreement (JOA).
According to a statement on Monday, 6th March 2023 signed by the NNPC Ltd Chief Corporate Communications Officer Garba Deen Muhammad, said that NNPC Limited and OML 18 Energy further appointed NNPC Eighteen Operating Limited as operator of the JV to protect the Joint Venture (JV) investment in OML 18, the non-operating partners, NNPC Limited (55% interest) and OML18 Energy Limited (“OML 18 Energy” – 16.20% interest), jointly owning 71.20% equity.
The statement said the change in operatorship has been notified to the Nigerian Upstream Regulatory Commission (NUPRC) and communicated to Eroton.
The statement reads in part, “While the key business reasons that made the change in operatorship are compelling, it is publicly available information that production has declined from thirty thousand barrels per day (30,000 bpd) to zero.
“The persisting inability of Eroton to meet the financial obligations of the Federal Government led to the sealing of Eroton’s head office in Lagos by the Federal inland Revenue Service (FIRS) for more than twelve months due to non-payment of outstanding taxes to the Government. Eroton is also not able to remit to the JV parties the proceeds of gas supplied to its affiliate, NOTORE.
“Several audits and investigations, including by the 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 the relevant Laws if drastic steps are not taken by non-operating partners.
“NNPC Limited in particular, as the majority shareholder with a unique stewardship responsibility to the Federation, 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 to protect the JV from Governmental or third parties actions from entities, including Eroton’s lenders and other service providers.
“It is important to highlight that OML 18 is an oil-producing block covering
1,035 square kilometers located south of Port Harcourt and contains eleven
(11) oil and gas fields with about 714 Million Stock Tank Barrels (MMSTB) of oil and condensate and 47 trillion cubic feet (tcf) of natural gas reserves.
“Eight (8) fields have been developed, but only four (4) are currently producing: Cawthorne Channel, 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 the 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%.
“From 2016 to date, OML 18’s net crude oil production has significantly fallen from approximately thirty thousand barrels per day (30,000 bpd) to zero production, despite consistent compliance to the joint venture’s funding obligations by the JV partners over the same period.
“In recognition of the impact of the challenges in crude evacuation via the Nembe Creek Trunk Line (NCTL), 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, and communities, amongst others to restore operations to their full capability and secure value for all partners and the Federation.
