The federal government has reignited its legal battle against Pan Ocean Oil Corporation (Nigeria) Limited over the alleged non-payment of $49,936,088.31 in oil and gas royalties, concession rentals, and gas flaring penalties.
The plaintiffs in the suit are the Minister of Petroleum Resources, the Ministry of Petroleum Resources, and the Federal Government of Nigeria.
In an amended statement of claim filed before the Federal High Court in Lagos by Akin Akintoye, SAN, the government alleged that Pan Ocean, while operating Oil Mining Lease (OML) 98 under a joint venture with the Nigerian National Petroleum Corporation (NNPC), failed to meet its statutory obligations under the Petroleum Act.
These obligations include the payment of royalties, concession rentals, and gas flare penalties.
Despite several demands and Pan Ocean’s written acknowledgment of the debt in a letter dated January 24, 2019, the government claimed the company has refused to pay the outstanding amount.
In the suit before Justice Daniel Osiagor, the government further stated that Pan Ocean’s continued non-compliance prompted the Minister of Petroleum to revoke OML 98.
The plaintiffs argued that the unpaid royalties deprive the government of vital revenue needed for national development.
They emphasised that the case was not about asset ownership or crude oil sales, but about mandatory statutory payments required from all leaseholders.
The government is seeking a declaration confirming Pan Ocean’s liability and an order compelling the company to pay $49,936,088.31 as of March 24, 2019.
It is also requesting interest at the rate of 10 percent per annum from February 1, 2019, until the date of judgment, and post-judgment interest until the debt is fully paid.
In its defence and counter-claim, filed by George Babalola, SAN, Pan Ocean denied most of the government’s allegations.
The company attributed its inability to meet payment obligations in part to NNPC’s alleged seizure of its share of crude oil worth $24,091,674 between January 2018 and March 2019.
Pan Ocean also cited heavy capital investments, including a 3D/4D seismic survey, a 200 mmscfd gas processing plant, and the Amukpe-Escravos crude export pipeline as reasons for its financial strain.
It said it invested $20.87 million in the seismic survey alone, intended to boost the declining production capacity of OML 98.
After the revocation of OML 98, Pan Ocean said it continued to operate the lease as a default operator on behalf of the government until May 2021, when the Nigerian Petroleum Development Company (NPDC) took over operations.
During that period, the company claimed it incurred $65.35 million in operational costs, of which $36 million has been reconciled with the Department of Petroleum Resources (now the Nigerian Upstream Petroleum Regulatory Commission, NUPRC).
As a result, Pan Ocean is counter-claiming a total of approximately $110 million–specifically, $65,352,399 for post-revocation operations (including the reconciled $36 million and an unreconciled $29.34 million), $20,874,164.40 for its share of the seismic data project, and $24,091,674 as its 40 percent share of crude oil proceeds allegedly withheld.
The company is asserting its right to set off the reconciled costs against the government’s claim and is seeking full reimbursement for all expenses incurred during its stewardship of OML 98.
