FG sues Pan Ocean Oil Corporation over $49.9 million debt
The Federal Government has renewed its legal battle against Pan Ocean Oil Corporation (Nigeria) Limited over alleged debt totaling $49,936,088.31 in oil royalties, concession rentals, and gas flaring penalties.
The plaintiffs in the case—comprising the Minister of Petroleum Resources, the Ministry of Petroleum Resources, and the Federal Government of Nigeria—filed an amended statement of claim through Senior Advocate of Nigeria, Akin Akintoye, before the Federal High Court in Lagos.
According to the government, Pan Ocean operated Oil Mining Lease (OML) 98 under a joint venture with the Nigerian National Petroleum Corporation (NNPC) but failed to meet financial obligations as stipulated under the Petroleum Act.
These obligations included statutory payments such as royalties, gas flare penalties, and concession rentals.
Despite multiple demands and what the government described as a written acknowledgment of the debt by Pan Ocean in a letter dated January 24, 2019, no payment was made.
“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,” the government stated.
The government further noted that this ongoing non-compliance led the Minister of Petroleum to revoke OML 98.
The plaintiffs emphasized the importance of these payments, arguing that the funds are essential to 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.”
In addition to seeking confirmation of Pan Ocean’s liability, the government is asking the court to order the company to pay the $49,936,088.31 owed as of March 24, 2019.
The suit also demands interest at 10 percent annually from February 1, 2019, until the date of judgment, as well as post-judgment interest until the debt is fully paid.
Pan Ocean, in its defence and counterclaim filed by Senior Advocate George Babalola, rejected most of the allegations.
The company argued that its financial troubles were worsened by the NNPC’s alleged seizure of crude oil valued at $24,091,674 between January 2018 and March 2019.
Additionally, Pan Ocean pointed to massive capital investments, including a 3D/4D seismic survey, a 200 million standard cubic feet per day (mmscfd) gas processing facility, and the Amukpe–Escravos crude oil pipeline project, which they say strained their finances.
It claimed that the seismic survey alone cost $20.87 million and was designed to boost OML 98’s declining production levels.
Following the lease revocation, Pan Ocean said it continued to operate OML 98 as a “default operator” on behalf of the federal government until May 2021, when the Nigerian Petroleum Development Company (NPDC) assumed full control.
During that period, the company claimed it incurred $65.35 million in operational expenses, of which $36 million has already been reconciled with the Department of Petroleum Resources (now the Nigerian Upstream Petroleum Regulatory Commission, NUPRC).
In total, Pan Ocean is counter-claiming approximately $110 million—comprising $65,352,399 for post-revocation operations (including both reconciled and unreconciled costs), $20,874,164.40 for its share of the seismic data investment, and $24,091,674 as its 40 percent share of crude oil revenues allegedly withheld.
The company insists it is entitled to set off these reconciled costs against the government’s claim and seeks full reimbursement for expenses it incurred during its management of OML 98.
