February 07, (THEWILL) – General Hydrocarbons Limited (GHL), owners and operators of OML 120, Deep Offshore Nigeria, says it remains open to mediation but will continue to fight for justice and damages against First Bank of Nigeria (FBN) in resolving the ongoing dispute between the two companies.
GHL stated this in an explainer released to THEWILL on Friday.
Titled “GHL vs FBN: The Facts, The Half-Truths and The Fiction”, GHL insisted that FirstBank reaped benefits from their oil field agreement while failing to uphold its part of a deal which required the Bank to finance GHL’s development of the Oil Mining Lease (OML) 120.
According to GHL, First Bank approached the company with a financing arrangement to fund the exploration, development, and production of the oil field. Under the terms, both parties agreed to share profits equally. Also, FBN was to receive its financing costs while using its share of the profits to offset a $600m non-performing loan, a liability discounted from $718m under the Asset Management Corporation of Nigeria’s (AMCON) eligible bank asset programme.
GHL, in an explainer, insisted that its agreement with First Bank played a huge role in stabilising the bank’s financial health.
As part of a tripartite agreement involving GHL, FBN, and AMCON, GHL provided a guarantee for FBN’s liability to AMCON. This allegedly helped FBN recover from financial distress, turning its books from a loss of N302bn to a profit of N151 billion in its 2021 financial year-end report. However, despite allegedly benefiting from the deal, GHL noted that First Bank failed to fulfil its obligations under the agreement.
The explainer reads: “Is GHL’s liability to First Bank a loan? The simple answer is NO, as it is not a normal commercial loan: it is a Project Finance relationship. Here is how:
“GHL is the awardee and licenced operator of OML 120. FBN approached GHL to finance the exploration, development and production of OML 120 and share profit 50:50 while paying FBN the cost of finance. The FBN’s 50% share is dedicated to paying down its non-performing loan of $600 million (discounted from $718 million from AMCON’s Eligible Bank Asset) in order to resolve FBN’s solvency issues. In doing that, GHL guaranteed FBN’s liability to AMCON through a Tripartite Agreement between GHL, FBN and AMCON.
“The result of the Tripartite Agreement was that FBN became immediately profitable and moved from a loss of N302 billion to a profit of N151Bn for 2021 FYE. However, in return, it has failed to meet its commitment under the Tripartite Agreement to fully finance and make the payments required for the optimal exploration and development of OML 120 as agreed in the Tripartite Agreement, resulting in losses in day rates and downtimes of $47 million, which has snowballed into the current impasse as FBN has failed to make further required payments for the drilling and exploration of OML 120. Essentially, FBN failed to fulfil its condition precedent to profitability in failing to finance OML 120 as agreed, leaving its financial statements open to challenge.
“Meanwhile, the FBN’s claim of a $225 million loan is not due as it is still covered by the moratorium, given that the project has not achieved commercial production. So, at best, FBN’s claim is premature.
“GHL has now gone for Arbitration which is ongoing and FBN has gone to court with a series of Ex Parte (temporary) Mareva measures, the first of which has been vacated and the case is now being heard on the merit, whilst the second temporary Mareva is pending at the Federal High Court in Port-Harcourt, Rivers State, both supported by” wild, unfounded and unproven allegations of dissipation of assets.”
“Did GHL dissipate any assets? The answer is no, as all payments were made by First Bank DIRECTLY to 3rd parties after due diligence and verifications by FBN, and the 3rd parties are mainly global, world-class, reputable companies with strict compliance regimes.
“GHL is filing a claim of over $1 billion in various courts, while FBN is claiming $225 million debt which it never complied with in line with the agreements.
“GHL will continue to fight for justice and damages whilst it remains open for mediation and resolution.”
Felix Ifijeh is a journalist with years of professional reporting experience. Known for his keen news sense, compelling storytelling and commitment to accurate, impactful reporting, he has built a reputation for turning leads into clear, engaging, and well-structured reports that resonate with readers. His work reflects deep newsroom experience and a commitment to accurate, impactful journalism.
