March 21, 2023

We Remain The Operator Of OML-18, Eroton Management Insists

3 min read

By the terms of the Joint Operating Agreements (JOA), Eroton Exploration and Production Company Limited has once again stated that it is the operator of OML-18. It has also added that any disputes between the parties are reserved exclusively for resolution under the JOA’s Dispute Resolution clause.

Eroton management responded in a statement made available to Swift Reporters by its managing director, Dr. Emeka Onyeka, and urged the public and stakeholders to disregard, saying that the company, as operator of OML-18, remains committed to transparency, integrity, and due process, “any misinformation as we continue to operate in compliance with all applicable laws and regulations.”

The management of the company, therefore, stated that the actions of the other JV partners (NNPC and Sahara) remain illegal and run contrary to the rule of law and in total breach of the terms and conditions stipulated in JOA.

The statement reads, “This statement is necessitated by the false information recently disseminated in the media on the status of operatorship of OML-18 and about Eroton Exploration and Production Company Limited.

“In complete breach of the terms of the JOA governing OML-18, and with total disregard for due process, the non-operators of OML-18; NNPC Limited (NNPC) and Sahara Field Production Limited (Sahara) (now known as OML 18 Energy Resource Limited) appointed a company, NNPC Eighteen Operating Limited as operator of OML-18.”

He added that Eroton, which was validly appointed Operator of OML-18 via a legal and contractual process involving all the participating entities in the JOA, “has approached the relevant courts to defend its legal rights.”

“In addition to this, Eroton has issued a Notice of Arbitration to NNPC and Sahara by the terms contained in the JOA. Based on the lack of any grounds for the purported takeover of operatorship by the terms of the JOA governing the block, lack of due process, and flagrant breach of the rule of law, Eroton has taken considered legal opinion to the effect that the status quo ante continues to remain the position and same will be upheld by the courts of Nigeria.

“This is despite any contrary public statements by any entity, in the interim period. If this action taken by NNPC and Sahara is allowed to persist, it poses a threat to all the JOAs in Nigeria involving both multinational and indigenous oil and gas companies, because the due process about dispute resolution has not been followed.

“Thus, there can be no removal of an operator without following the laid down procedures and processes in Article 2.4 of the JOA. The process is designed in such a way that notices requirements cannot be waived and the removal of operatorship cannot be carried out without following the process provided in the JOA.”

The management pointed out that Eroton took over operatorship of OML-18 in 2015 with a meager production of 6,000 bbls/d and increased production to over 50,000 bbls/d of dry crude (75,000 bbls/d of gross liquids) within less than 24 months.

“This was considered a spectacular achievement at the time by both the NNPC, the Department of Petroleum Resources (DPR) (now NUPRC), and the entire industry. Eroton, as an operator, was also recognized by NNPC as being one of the two JV operators with the lowest technical cost per barrel in the industry over the period.

“This stellar and unique operatorship of the asset continued until the wider industry became severely impacted firstly by COVID-19, and then by the unprecedented level of crude theft and sabotage plaguing the country in the Niger Delta area since 2020 till date,” Onyeka said.

Additionally, he said it was important to state that since Q4, 2021, the federal government had virtually received zero crude oil from any company utilizing the Nembe Creek Trunk Line (NCTL), “a pipeline that is partially owned by NNPC, as its primary evacuation route owing to the force majeure declared by the NCTL operator and the widespread vandalism and crude oil theft recorded in the region.

“The activities of criminal elements in the Niger Delta are known to all and continue to adversely affect the entire region and the nation’s proceeds from oil. For example, Eroton’s crude oil receipts steadily dropped at an alarming rate in 2021, culminating in zero receipts in November 2021 at Bonny Terminal.

The Nigerian National Petroleum Company (NNPC) Limited last week announced that it has replaced Eroton Exploration and Production Limited as the new operator of oil mining lease (OML) 18.

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