The cash call dispute among the joint venture partners on the Aje oil field, located offshore Lagos, has yet to be resolved amid a mechanical problem limiting production from one of the wells.
London-based energy firm, MX Oil, which has an indirect investment in Oil Mining Lease 113, said the Aje-5 well, whose performance has continued to be limited by the mechanical problem, required subsurface intervention.
It said the intervention had begun and further details would be provided in due course.
Yinka Folawiyo Petroleum Company Limited, a wholly owned indigenous firm, is the operator of OML 113, where the field is located. Other partners are New Age Exploration Nigeria Limited, EER (Colobus) Nigeria Limited and PR Oil & Gas Nigeria Limited (the holder of MX Oil’s investment in the field).
The PUNCH had reported on December 5, 2016 that a disagreement had emerged among the partners over cash call a few weeks after the investors shared the first income from the field.
One of the partners, Panoro Energy announced then that it was in disagreement with its JV partners in OML 113 in Nigeria and intended to initiate arbitration and legal proceedings to protect its interests.
A source familiar with operations on the Aje field told our correspondent that the second lifting had been done, adding that the dispute would not affect activities on the field, which achieved first oil production at a rate of about 7,000 barrels per day on May 3, 2016.
According to Panoro, the dispute concerns the purported passing of resolutions by the JV partners with respect to a proposed new well to be drilled at Aje and a related cash call.
It was gathered that the partners had planned to embark on a work programme that would increase oil production and reserves from the field through drilling of new wells in 2016/2017, and were working on an Aje gas field development plan for the Phase 3 Turonian gas development with first gas production anticipated by the first half of 2018.
Panoro, an independent exploration and production company with assets in Nigeria and Gabon, holds 6.502 per cent participation interest in OML 113 through its fully-owned subsidiary, Pan Petroleum Aje Limited.
In its latest update on the dispute, the company said PPAL had formally commenced dispute resolution proceedings with the OML 113 joint venture partners by filing a request for arbitration with the Secretariat of the International Chamber of Commerce.
The Commercial Court division of the High Court in London had in December granted PPAL an interim injunction, temporarily restricting the JV partners from taking any action under the default provisions of the Joint Operating Agreement that would prevent PPAL’s continued participation in the JOA and OML 113.
The update read in part, “While Panoro has the financial ability to fully meet the amount of this disputed cash call, the company believes the drilling of any new well is premature at this stage.
“Panoro is also of a firm view that the decision to incur such additional capital expenditures at Aje unambiguously requires unanimous consent of joint venture partners, which as such has not been taken in accordance with the Joint Operating Agreement procedure.”
The company said it would seek to recover all losses, costs, expenses, compensation and damages in law and equity caused directly or indirectly by the partners’ breach of their contractual and equitable obligations.
Five wells have been drilled to date on the field, while two more wells, Aje-6 and Aje-7, were expected to bring total Cenomanian oil production up to over 50 million barrels, according to Panoro.
It said a third Turonian gas condensate development phase was being conceptualised and would likely involve three or four wells producing over 500 billion cubic feet of gas, 22 million barrels of condensate and 40 million barrels of liquefied petroleum gas.
On Wednesday, MX Oil, said it had raised £5m before expenses via the placement of 333,333,333 new ordinary shares.
The company said it anticipated that Aje 6 would be drilled in the short term to increase production from the Aje field, adding that the purpose of the placement was to ensure that the company had the appropriate level of funding available to enable it to proceed with the activities.