Akin Kuponiyi
As a result of alleged refusal of an Oil and Gas company, PAN OCEAN OIL CORPORATION(NIGERIA) LIMITED, to pay to Federal Government of Nigeria, the sum of US $ 49,936,088.31 being Oil and Gas Royalty, Concession and Gas flared Minister of Petroleum Resources alongside, Ministry of Petroleum Resources and Federal Government of Nigeria have renewed their legal battle against the company.
According to amended statement of claim filed before a Federal high court in Lagos, by a senior Advocate of Nigeria, Akin Akintoye II, it was alleged thus: that PAN OCEAN OIL CORPORATION(NIGERIA) LIMITED, while operating under a Joint Venture with the Nigerian National Petroleum Corporation (NNPC), a parastatal distinct from NUPRC, was the holder of Oil Mining Lease (OML) 98 and was required to fulfill the special terms and conditions of its lease as prescribed under the Petroleum Act, Cap. P 1q, Laws of the Federation of Nigeria, 2004, which includes amongst others the payment of Oil and Gas Royalty, Concession Rental and Gas Flared payment.
The Oil Mining Lease (OML) 98 was renewed in favour of the Defendant on 7th day, 1998.
However, the defendant has failed and refused to pay the Federal Government of Nigeria its due Oil and Gas Royalty, Concession Rental, and Gas Flare payment over the years despite repeated demands by the Plaintiffs.
The Plaintiffs aver that the Defendant has made several promises and proposals for the payment of the debts to the Plaintiffs, but she has continually failed to keep her promises to the Plaintiffs.
The Plaintiffs aver further that the Defendant currently owes the Federal Government of Nigeria the sum of Forty-Nine Million, Nine Hundred and Thirty-Six Thousand, Eighty-Eight Dollars, Thirty-One Cent (US$49,936,088.31) as Royalties and Gas Royalty, Concession Rental and Gas Flared Payment due.
The Plaintiffs aver that the Defendant, upon receipt of the two letters of demand, wrote to acknowledge its indebtedness to the Plaintiffs vide letter dated 24th January, 2019.
The Plaintiffs aver that it was the Defendant’s failure and refusal to pay the debts and her refusal to provide a satisfactory explanation on why the debts have not been paid that led to the revocation of the Oil Mining Lease (OML) 98 by the Honourable Minister for Petroleum pursuant to the Petroleum Act.
The continuous failure and refusal of the defendant to pay the debt of Forty-Nine Million, Nine Hundred and Thirty Thousand, Eighty-Eight (US$49,936,088,.31.Dollars Thirty -one Cent due to the Federal Government of Nigeria is depriving the Government of reasonable revenue, which is needed for the performance of its constitutional duties.
The interest of Nigerians who are in dire need of social amenities is at stake if the defendants are allowed to continue owing the debt to the Federal Government of Nigeria.
The Plaintiffs aver that the institution of this case against the Defendant is necessitated by the continuous indebtedness of the Defendant to the Federal Government of Nigeria over the years of operating Oil Mining Lease 98 (OML 98) as Oil and Gas Royalty, Concession Rental and Gas Flared Payment due, While the claim before this Court has to do with statutory and mandatory.
Payments expected of all Oil Mining Lease holders, including NNPC, the claim has nothing whatsoever to do with assets or crude sales funds.
The Plaintiffs aver that the Oil Mining Lease agreement between the Federal Republic of Nigeria and the Defendant is a distinct and separate agreement, which has nothing.
Whatsoever is to do with expenses incurred by the Defendant in operating the Oil Mining Lease. Hence, the acquisition and processing of 3d/4d seismic data to deepen the oil reserves and rejuvenate OML 98 is unrelated to the Oil Mining Lease agreement, the breach of which led to the revocation of OML 98 and, invariably, the institution of this case against the Defendant.
The Plaintiffs aver that there is no ambiguity on the sum owed by the Defendant while operating OML 98 and how the said sum accrued to the Plaintiffs.
The Plaintiffs aver that any business contractual agreement the Defendant has with other stakeholders in the Petroleum Industry, including NNPC and Nigerian Petroleum Development Company Ltd. (NPDC), which are distinct legal entities, does not in any way whatsoever connect to or affect the liabilities of the Defendant.
The Plaintiffs aver that there was a meeting held between the Department of Petroleum Resources (now NUPRC) and the Defendant on 18th June, 2019, which led to the taking of inventory of the assets on 31st July and 1st August, 2019. This exercise has no link to the Plaintiffs’ claim since the assets were not part of the revoked lease (OML 98).
Consequently, the Plaintiff’s claims against the Defendant are as follows:
A declaration that the Defendant’s failure and refusal to pay the Plaintiffs their due Oil and Gas Royalty, Concession Rental and Gas Flared payments despite repeated demands from the Department of Petroleum Resources has entitled the Plaintiffs to recover the outstanding debt as provided for under the Petroleum Act, Cap. P 10, Laws of the Federation of Nigeria, 2004.
An Order compelling the Defendant to pay the Plaintiffs the sum of Forty Nine Million, Nine Hundred and Thirty-Six Thousand, Eighty-Eight Dollars, Thirty-One Cent (US$49,936,088.31) being Oil and Gas Royalty, Concession Rental and Gas Flared payment due to the Federal Government of Nigeria as at 24th March, 2019.
10% interest per annum on the claimed sum from 1st February 2019 till the date of judgment and 10% interest per annum from the date of judgment until the final liquidation of the judgment sum.
However, PAN OCEAN OIL AND GAS COMPANY, in its consequential amended statement of defence and counterclaim filed before the court by Barrister George Olatunde Babalola SAN, denied almost all the averments of the Plaintiffs
In the consequential amended statement of defence and counterclaim to the Plaintiffs’ amended Statement of Claim, filed before the court by George Babatunde Babalola SAN, the Defendant states as follows:
Its inability to meet its financial obligation on Royalty to the Plaintiffs was partly due to the decision of the Plaintiffs through the erstwhile Nigerian National Petroleum Corporation (NNPC) to seize the Defendant’s share of crude oil produced in OML 98 between January 2018 to March 2019, which amounted to the sum of $24,091,674.00.
Another factor that contributed to its inability to fulfil its payment obligation to the plaintiffs was the huge capital investments made by the defendant and its Joint Venture partner, NNPC, for the rejuvenation of the OML 98 for the benefit of both parties.
OML 98 has been in production for over 40 years at the time and hence, it was necessary to further invest heavily on the said OML 98 to rejuvenate its depleted production capacity and that, it was based on this that the Defendant and its Joint Venture Partner, NNPC undertook a 3D/4D seismic survey which led to the discovery of huge by: passed hydrocarbon that could be exploited to revive the said OML 98. The seismic survey was done by Integrated Data Services Limited at the agreed sum of $ 52,184,411.99 (Fifty Two Million, One Hundred and Eighty-Four Thousand, Four
Hundred and Eleven US Dollars) out of which the Defendant contributed 40%, which came to the sum of $ 20,874,164.40 (Twenty Million, Eight Hundred and Seventy-Four Thousand, One Hundred and Sixty-Four Dollars, Forty Cents.
In collaboration with its joint venture partners, the NNPC, which was wholly owned by the Plaintiffs, the Defendant also
undertook very major and strategic economic projects for the rejuvenation of the OML 98, including the 200 mmscfd gas processing plant with LPG and propane Modules, the Amukpe-Escravos Pipeline, which is a 20-inch by 67km, 160,000 bpd, Horizontal Directional Drilling (HOD) Crude export line.
RIGHT OF SET -OF
Subject to the paragraph above, and the set-off hereinafter, the defendant states as follows:
Upon the revocation of OML 98, the Plaintiffs through the
The Director of Petroleum Resources convened a meeting in his Office on 18/6/2019 to discuss post-revocation issues, especially the assets and interim management of the lease. The Defendant was mandated as a default operator to continue to
operate OML 98 on behalf of the Plaintiffs pending the time a new operator would be appointed.
At the meeting stated above, a committee was set up comprising representatives of the Plaintiffs and the Defendant. After several meetings of the Committee between
31/7/2019 — 1/8/2019 titled OML 98 Inventorization (Pan the Committee came up with the of OML 98
As a default operator appointed by the Department of Petroleum Resources, the Defendant managed the operation of OML 98 until May 2021, when the Plaintiffs appointed a new operator, the National Petroleum Development Company, to manage the operation of the said OML 98 for the Plaintiffs.
To the knowledge of the Plaintiffs, the Defendant incurred the
sum of $65,352,399 for the management of the said OML 98,
which include salaries and wages, and operational costs. The Defendant will rely on the documents submitted to the Plaintiffs. The Defendant submitted the cost and expenses incurred in the management and operation of the lease to the Plaintiffs through the Department of Petroleum Resources and several meetings were held where the sum of $36, 007, 556 (Thirty-Six Million, and Seven Thousand, Five Hundred and Fifty-Six Dollars) was reconciled as due and payable to the Defendant for the operation of the lease between April 2019 and January 2020.
Despite submitting all the necessary documents to the Plaintiffs, they have yet to reconcile and approve the payment in respect of the cost and expenses incurred by the Defendant in the operation of the lease as a default operator between February 2020 and May 2021.
By a letter dated 18/3/2021, the Department of Petroleum Resources informed the Defendant that it had directed the new operator appointed by it, National Petroleum Development Company, NPDC, to refund the reconciled post-revocation cost incurred by the Defendant, but to date, the money has not yet been refunded.
The Defendant is entitled to set off the said sum of $36,007,556 already reconciled in diminution of the Plaintiffs’ Claim in this suit.
COUNTER-CLAIM:
The Defendant/Counter-Claimant PAN
States that it is entitled to the sum of $65,352,399 (SixtyFive Million, Three Hundred and Fifty -Two Thousand, Three Hundred and Ninety-Nine Dollars) being the cost incurred as a default operator of OML 98 between April 2019 to May 2021 at the instance of the Plaintiffs, comprising of the sum of $36,007,556 already reconciled and the sum of $29,344,835 yet to be reconciled by the Department of Petroleum Resources.
The Defendant/Counter-Claimant is also entitled to the sum of $20, 874, 164.40 (Twenty Million, Eight Hundred and Seventy-Four Thousand, One Hundred and Sixty-Four Dollars, Forty Cents.) being own share of the cost expended on seismic data prepared by Integrated Data Services Limited and which the Plaintiffs through its appointed operator, NDPC has been using to operate OML 98.
The Defendant/Counter-Claimant states that It Is entitled to the sum of $24,091,674.00, which represents its 40% share of the proceeds of the crude oil produced in OML 98 from January 2018 to March 2019