Eroton affirms operatorship of OML-18

Eroton Exploration and Production Company Limited has reiterated that it remains the operator of OML-18, in line with provisions of the Joint Operating Agreement (JOA), adding that any dispute, whatsoever, between the parties are reserved exclusively for resolution under the dispute resolution clause of the agreement.

The management of the company, therefore, stated that actions of the other joint venture (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 NNPC had hinged the replacement of Eroton from OML-18 to the inability of Eroton to meet the fiscal obligations of the Federal Government, as well as inability to remit to the JV parties the proceeds of gas supplied to its affiliate, NOTORE, among other issues.

The Eroton management in a statement by the Managing Director, Dr. Emeka Onyeka, stated that Eroton, as the operator of OML-18, remains committed to transparency, integrity, and due process, and urged the public and stakeholders to disregard “any misinformation as we continue to operate in compliance with all applicable laws and regulations.

“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 Joint Operating Agreement (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 Notice of Arbitration to NNPC and Sahara in accordance with the terms contained in the JOA. On the basis of the lack of any grounds for the purported takeover of operatorship in accordance with 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 JOA’s in Nigeria involving both multinational and indigenous oil and gas companies, because due process with regard to 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 noted that Eroton took over operatorship of OML-18 in 2015 with a meagre 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 a period of 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 operator, was also recognised by NNPC as being one of the two JV operators with the lowest technical cost per barrel in the industry over the time 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 is important to state that since Q4, 2021, the Federal Government of Nigeria has virtually received zero crude oil from any company utilising 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 receipt in November 2021 at Bonny Terminal.

“This was despite efficient wellhead production data showing produced volumes of over 500,000 barrels of oil for the same month, thus meaning that all the approximately 500,000 barrels of crude oil produced, processed, and delivered into the NCTL was stolen. Consequently, and in agreement with the JV partners, Eroton shut in the Wells.”