In a recent statement, General Hydrocarbons Limited (GHL) has vehemently denied allegations of owing First Bank of Nigeria (FBN) $225 million. The statement, signed by Abdelmuizz Bello, Director of Strategy & Operations at GHL, provides a detailed breakdown of the issues in dispute between GHL and FBN.

According to the statement, “We entered a legally binding, enforceable Subrogation Agreement with First Bank on May 29, 2021, with FBN agreeing to fund GHL’s exploration, production and development of OML 120 in exchange for sharing profit from oil proceeds from the OML in a 50:50 ratio after statutory payments and taxes over 8 years.”

However, GHL alleges that FBN failed to meet its agreed-upon financial commitments, resulting in critical challenges for the development of OML 120. As stated in the release, “Essentially, GHL’s grouse is FBN’s failure to meet its agreed and executed financial commitments which GHL had believed would be made, when it signed the agreement resulting in critical challenges for the development of OML 120.”

Despite disbursing $185 million, FBN’s disbursement process was often delayed, lasting up to 70 days after funding requests. This led to massive losses in day rates and downtimes, resulting in inefficiencies and losses of over $147 million. As GHL emphasized, “The way and manner of the disbursement which was agreed to be 5 days after funding request, sometimes lasted up to 70 days after funding request; service providers led by Schlumberger, Baker Hughes and Century that were supposed to be paid at the same time for various interventions were paid sporadically at different times.”

GHL also highlighted that FBN’s credit and risk team verified and approved all contracts and invoices due to contractors engaged for the development and operations of the oil mining lease. Payments were made directly by FBN to these contractors and service providers, rendering allegations of diversion “befuddling and without merit.” As stated in the release, “The allegations of a diversion of the monies advanced to GHL are therefore befuddling and without merit as payment were made by FBN directly to service providers after vetting and approval by its credit and risk teams.”

The statement further noted that the disbursed loan of $185 million is not due for repayment, as it is still within the moratorium period as per the Facility and Tripartite Agreements. The loan is only due when there are profits to be shared 50:50 from commercial oil production. As GHL emphasized, “It is important to note that the disbursed loan of $185million is not due for repayment. The loan is still within the moratorium period as per the Facility and Tripartite Agreements.”

GHL accused FBN of attempting to bully and force GHL out of the transaction, using its directors and other proxies to induce a crisis. As stated in the release, “Instead of performing its role as a lender who was saved from the abyss, FBN is trying to bully and force GHL out of the transaction and take over the oil bloc, using its directors and other proxies with this clearly induced crisis.”

GHL is seeking to exercise its options under the agreement to find new lenders and partners that can efficiently and cost-effectively save the project for Nigeria. As stated in the release, “GHL is seeking to exercise its options under the agreement to find new lenders and partners that can be efficient and cost effective to save the project for Nigeria , should FBN remain intransigent.”

The statement concluded by emphasizing that GHL has obtained injunctions against FBN, restraining the bank from obstructing or preventing GHL from obtaining necessary funding for OML 120. As stated in the release, “GHL approached the Federal High Court and after arguments by both sides, obtained the following injunctions against First Bank on December 12, 2024.”

Despite this, FBN obtained an interim Mareva injunction restraining GHL and its shareholders from operating their accounts over the purported debt. GHL views this as an abuse of the court process and is seeking justice. As stated in the release, “This impunity is now back before the Federal High Court, Lagos. We believe that sooner or later Justice will be served.”