The Federal Government has initiated fresh legal proceedings against Pan Ocean Oil Corporation (Nigeria) Limited over an alleged outstanding debt of $49.9 million related to unpaid oil royalties, concession rentals, and gas flaring penalties.
Filed before the Federal High Court in Lagos, the amended suit—brought by the Minister of Petroleum Resources, the Ministry of Petroleum Resources, and the Federal Government—claims Pan Ocean failed to meet its statutory financial obligations while operating Oil Mining Lease (OML) 98 under a joint venture agreement with the Nigerian National Petroleum Corporation (NNPC).
According to the claim, the alleged debt, which accrued over several years, was acknowledged in writing by Pan Ocean in a letter dated January 24, 2019. Despite repeated demands, the company has reportedly failed to make any repayment.
“The case is strictly about Pan Ocean’s failure to meet its mandatory financial responsibilities under the Petroleum Act,” the government emphasized, adding that the revenue in question was essential for national development.
As a result of the continued non-compliance, the Minister of Petroleum revoked Pan Ocean’s OML 98 lease. The government is now asking the court to compel the company to pay the $49,936,088.31 owed as of March 2019, along with interest at 10% per annum from February 1, 2019, until judgment is delivered—and post-judgment interest until the debt is fully settled.
In response, Pan Ocean, through its legal team led by Senior Advocate George Babalola, denied the allegations and filed a counterclaim seeking reimbursement for financial losses it claims were incurred during and after the lease revocation.
The oil firm argued that between January 2018 and March 2019, NNPC allegedly seized crude oil valued at $24 million, exacerbating its financial challenges. It also cited over $20 million invested in a 3D/4D seismic survey and major infrastructure projects, including a gas processing facility and the Amukpe–Escravos pipeline, as key contributors to its cashflow issues.
Pan Ocean further claims that it continued operating OML 98 on behalf of the federal government as a “default operator” until May 2021, when the Nigerian Petroleum Development Company (NPDC) took over. During that period, the company says it incurred $65.35 million in operational costs—$36 million of which has been reconciled with the Department of Petroleum Resources (now NUPRC).
In total, Pan Ocean is counterclaiming roughly $110 million, which includes the reconciled operational costs, its share of the seismic investment, and withheld crude revenues. The company argues it is entitled to offset these expenses against the government’s claims.
The case is pending before the Federal High Court, with no date yet announced for the next hearing.
