Nigerian government revokes licenses belonging to Pan Ocean, six others

Lagos — The Nigeria government has revoked Oil Mining Licenses belonging to Pan Ocean and six others, SweetcrudeReports has learned.

Sources close to the matter hinted that the decision to withdraw the licenses of the affected Nigerian companies came following complaints by the Minister of State for Petroleum Resources, Ibe Kachukwu over the failure to pay royalties.

The revoked licenses are of six OMLs and one oil prospecting lease, OPL, in the onshore, shallow water and deepwater Niger Delta basin.

The assets affected are OML 98 controlled by Pan Ocean and owned by businessman Lekan Fadeyi; OMLs 120 and 121, held by Allied Energy, now Erin Energy- the company is now bankrupt; OML 108, owned by Express Petroleum, and OML 141, held by Emerald Resources.

The only affected OPL 206 is held by Summit Oil International, a company founded by the late Moshood Abiola.

Pan Ocean, Allied Energy, and Yinka Folawiyo were among companies listed inside the Nigeria Extractive Industries Transparency Initiative, NEITI’s latest report, for owing the Nigerian government some royalties in 2016.

NEITI specifically stated that Pan Ocean Oil Corporation (Nigeria) Limited failed to make any financial payments in 2016, despite being in Joint Venture (JV) arrangement with the Federation.

“The non-payment by these companies will result in revenue loss to the federation. It is worthy to note that Pan Ocean did not make any financial payments in 2016, despite being in JV arrangement with the federation,” NEITI noted.

Going by the fact that the issues were still unresolved three years after, NEITI, therefore, called on the Department of Petroleum Resources, DPR, to investigate the non-payment of royalties by these companies and ensure the funds are recovered as appropriate.

Pan Ocean and Yinka Folawiyo Petroleum Company Limited were also listed among 31 companies that defaulted in the payment of Education Tax, EDT, in 2016.

Particularly, NEITI said: “The Education Tax, EDT, payment dropped by 52.4 percent from $667.77 million in 2015 to $317.853 million in 2016. It is noteworthy that 31 companies did not make EDT payments in 2016.

To “The following are the companies as well as reasons given for non-payment: Eight companies, namely: Network Exploration & Platform, Frontier Oil, Newcross Petroleum, Elcrest, Shoreline, Neconde, Platform, and ND Western were granted pioneer status and therefore exempted from payment of EDT. Delta, Edo communities benefit from Pan Ocean free healthcare services. “Seplat, SA Petroleum, Universal Energy, and Sterling Global are Production Sharing Companies, PSC, which did not pay EDT due to cost recovery. While Allied Energy, Belema Oil, Brittania-U, Dubri Oil, Energia Limited, Express, Midwestern, Pan Ocean, Sheba, and Yinka Folawiyo were defaulting companies as at 31 December 2016.” NEITI further indicted Pan Ocean over the non-payment of Petroleum Profit Tax, PPT, in 2016, along with some other companies.

The agency said: “The following companies defaulted in tax payment in 2016; Allied Energy, Belema Oil, Brittania-U, Dubri Oil, Energia Limited, Midwestern, Pan Ocean, SA Petroleum, Seplat, and Yinka Folawiyo”.

“Express Petroleum and Sheba Petroleum did not provide relevant information to the audit. This leads to revenue loss to the federation. Federal Inland Revenue Service, FIRS, should carry out tax audit of these defaulting companies”, according to the report.

“There is need for the Federal Ministry of Finance to task FIRS to provide a status update on all companies and their outstanding liabilities till date.”

Furthermore, NEITI disclosed that Pan Ocean owed the NNPC an outstanding debt of $135.8 million since 1985, while it called for an independent valuation of Pan Ocean indebtedness to determine the true fair value of interest thereon.

NEITI said Pan Ocean had a participating agreement with NNPC to explore and produce oil from Oil Mining Lease, OML, 98 as an operator for itself and on behalf of NNPC. This agreement was dated August 1st, 1979 and the distribution of the participating interests are as follows: NNPC 60 percent and Pan Ocean 40 percent.

“There is an outstanding debt of $135.793 million due from Pan Ocean to NNPC. Recovery of only the principal debt amount put at $135,793 million without consideration of interest results to a loss in the time value of money”, NEITI’s report had said.

Leave a Reply

Your email address will not be published. Required fields are marked *