Nigdel Accuses SacOil of Defaults

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SacOil OPL233

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Nigdel United Oil Company Limited, alleges that SacOil Nigeria Limited, its partner from South Africa, has been defaulting on its financial obligations to their joint project on OPL 233

ALL is not well with the business relationship the Nigdel United Oil Company Limited, Nigdel, has with SacOil Nigeria Limited, SacOil, its partner. Nigdel, an independent indigenous oil and gas exploration and production company, is alleging that SacOil, a subsidiary of SacOil Holdings Limited, a South African oil and gas exploration and production company, has been defaulting in meeting its financial obligations to the OPL 233 in the Niger Delta region of Nigeria.

OPL 233 is operated by Nidgel while SacOil is one of its partners.  The OPL 233, which is being operated under the terms of a Production Sharing Contract, PSC, is currently at the 3D OBC seismic data acquisition stage which will be followed by scheduled drilling activities.

Despite the progress made in the project, SacOil, according to Nigdel, has consistently and continually failed to fulfil its financial obligations under the agreements between the parties. SacOil had earlier been inundated with various board and management concerns heralding in the dissolution, reconstitution and restructuring of its board of directors in 2014.

Thus Nigdel had to further prolonged and cumulative failure by SacOil to deliver on its financial obligations under the terms of the Farm-In Agreement, FIA, as well as Joint Operating Agreement, JOA, opened discussions with the company towards remedying the situation and fulfilling its obligations under the Agreements.

In an effort to manage SacOil’s default amicably for the benefit of the joint venture, Nigdel had proffered various alternatives including reviewing and reprioritising its entitlements on the asset. SacOil’s continued failure, however, resulted in Nigdel, as operator and non-defaulting party, issuing a formal default notice to SacOil. The default notice period expired on April 18, without any action from SacOil.

In line with the express provisions of the FIA and JOA, Nigdel reserves the right to require that SacOil completely withdraw from the JOA and the contract in the OPL 233 thereby resulting in Sacoil’s loss of its title, rights and beneficial interest in the OPL 233 but has been cautious in exercising this option.

Rather than resolving the subsisting impasse on its default, SacOil has resorted to announcing its withdrawal from OPL 233 on Wednesday, May 20, a move calculated to misinform both its shareholders and the public at large. Nigdel is of the view that Sacoil cannot validly withdraw from OPL 233 under the provisions of the FIA under which it has relied on without remedying its existing default first. Also, it is a defaulting party which has failed to meet its obligations under the joint venture.

Joseph Penawou, chief executive officer of Nigdel, stated that “Nigdel remains committed to the success of OPL 233 located in the prolific Niger Delta region of Nigeria, and would continue to concentrate its resources to complete its work programme in adherence to the requirements of the PSC as well as its objective of positioning itself to be a strategic player in the Nigerian oil and gas industry, delivering superior returns from a sustainable asset portfolio”.

— May 26, 2015 @ 8.31 GMT

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