NNPC kicks out Eroton E&P as operator of OML 18, sets to boost Nigeria’s output by 30,000bpd


Oredola Adeola

The Nigerian National Petroleum Company (NNPC) Limited has confirmed the takeover of operatorship of Oil Mining Lease (OML) 18 from Eroton Exploration and Production Limited (Eroton) for persistently failing to meet up with thirty thousand barrels per day (30,000 bpd) production target and inability to fulfil JV’s obligations to partners and the Nigerian Government.

Garba Deen Muhammad, Chief Corporate Communications Officer, NNPC Ltd. made this known in a statement obtained by EnergyDay on Monday.

According to him, in order to protect the JV investment in OML 18, the non-operating partners, NNPC Limited (55% interest) and OML 18 Energy Limited (OML 18 Energy- 16.20% interest) jointly owning 71.20 equity, removed Eroton as operator of the JV in line with the provision of the Joint Operating Agreement (JOA).

The NNPC’s spokesperson also revealed that the non-operating partners have consequently appointed a subsidiary firm, NNPC Eighteen Operating Limited, as the new operator of OML 18 to replace Eroton to curtail further degradation of the assets and revamp oil and gas.

He confirmed that the change in operatorship has been notified to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and officially communicated to Eroton.

Garba Deen added that removing an operator in these circumstances is therefore inevitable in order to protect the JV from Government or third parties’ actions from entities, including Eroton’s lenders and other service providers.

EnergyDay’s check showed that the OML 18 is an oil-producing block covering 1,035 square kilometres located south of Port Harcourt, Rivers State, Nigeria and contains eleven (11) oil and gas fields with about 714 Million Stock Tank Barrels (MMSTB) of oil and condensate and 4.7 trillion cubic feets(tcf) of natural gas reserves.

The statement also confirmed that eight (8) fields have been developed, with only four (4)- Cawthorne Channel, Awoba, Akaso and Alakiri- currently producing.

Further revelation showed that in 2014, Eroton acquired the 45% interest previously owned by Shell- 30 % Total -10% and NAOC -5% , in the then NNPC/SPC/Total/Agip OML 18 JV.

Following the equity acquisition, Eroton became NNPpartnerners in the OML 18 JV and it was designated as the Operator in accordance with the relevant provision of the JOA between the parties. Subsequently in 2018, Eroton farmed out part of its equity to OML 18 Energy Resources Limited – 16.20 % and Bilton Energy Limited -1.80%.



NNPCL in the statement also argued that while the key business reasons that made the change in operatorship are compelling, it is publicly available information that production has declined from thirty thousand barrels per day (30,000 bpd) to zero.

Garba Deen also revealed that the Eroton’s head office in Lagos has persistently been unable to remit its outstanding taxes to the Federal Inland Revenue Service(FIRS) for more than twelve months.

He also alleged that Eroton is also not able to remit to the JV partners the proceeds of gas supplied to its affiliate, NOTORE, adding that a number of audits and investigations, including by the EFCC, NUPRC’s work programme audit, and others have been undertaken or are ongoing.

The NNPC’s spokesperson also stated that some of the audits were regulatory steps that may lead to license revocation under the relevant laws if drastic steps are not taken by non-operating partners.

He said, “It is important to highlight that NNPC Limited in particular, as majority shareholders with a unique stewardship responsibility to the Federation, is committed to assuring that the energy and financial security of the Country is uppermost in its business decisions.

“From 2016 to date, OML 18’s net crude oil production has significantly fallen from approximately thirty thousand barrels per day (30,000 bpd) to zero production, despite consistent compliance to the JV’s funding obligation by the JV partners over the same period.

“In recognition of the impact of the challenge in crude evacuation via the Nembe Creek Trunk Line(NCTL), NNPC Eighteen Operating Limited and partners approved an Alternative Crude Oil Evacuation Process by barging, while Eroton failed to execute the proposed alternative, leading to the current zero production status of the asset.

Garba Deen however emphasised that the new Operator, NNPC Eighteen Operating Limited has taken control of the operational and production assets in the block and is currently engaging the relevant stakeholders, including workers union, and communities, amongst others to restore operations to their full capability and to further secure value from all partners and the Federation.