General Hydrocarbons Limited (GHL) has firmly denied claims by First Bank of Nigeria (FBN) Plc of an outstanding $225 million debt, describing the allegations as unfounded, misleading, and malicious. GHL clarified its financial relationship with FBN, emphasizing the existence of binding agreements, a court judgment in its favor, and a moratorium pending commercial oil production.
GHL’s Director of Strategy and Operations, Abdelmuizz Bello, addressed the controversy, referencing media reports on a Federal High Court order to freeze GHL’s accounts over alleged indebtedness. Bello countered these reports, asserting the claims were baseless and designed to mislead the public.
He explained that GHL and FBN entered into a Subrogation Agreement on May 29, 2021. This agreement stipulated that FBN would finance the development of OML 120 in exchange for a 50% profit share from oil proceeds after statutory payments and taxes. This arrangement aimed to settle FBN’s non-performing loans (NPLs), estimated at $718 million but discounted to $600 million for resolution.
Bello detailed that the NPLs originated from FBN’s unsecured loans to Atlantic Energy, which had no connection to GHL. Under the agreement, profits from OML 120 were intended to address FBN’s financial gaps. The Subrogation Agreement enabled FBN to recover financially, transforming a potential $302 billion loan loss into a $151 billion profit by the end of 2021, according to Bello.
Despite these agreements, Bello criticized FBN for failing to meet its financial commitments. He revealed that while $185 million was disbursed to GHL, delays of up to 70 days in releasing funds—contrary to the agreed five-day timeline—caused operational inefficiencies and financial losses exceeding $147 million. Payments to service providers such as Schlumberger, Baker Hughes, and Century were fragmented, leading to arbitration awards and additional costs.
Addressing allegations of fund diversion, Bello stated that all payments were vetted and approved by FBN’s credit and risk teams before being made directly to contractors. He dismissed claims of misconduct as malicious and libelous, noting that FBN had full oversight of financial disbursements, including appointing a Chief Financial Officer for GHL.
Bello also emphasized that the $185 million loan was not yet due for repayment, as it remains within the moratorium period stipulated by the agreements. He accused FBN of attempting to undermine GHL’s operations and take control of OML 120 by creating a manufactured crisis.
Legal proceedings further complicate the dispute. GHL secured court injunctions in December 2024 to prevent FBN from obstructing its funding efforts, enforcing security interests, or appointing an operator for OML 120. Bello claimed FBN only demanded repayment after losing in court, highlighting its non-compliance with agreed terms.
GHL is now seeking alternative financing options to continue operations, leveraging a clause in the Subrogation Agreement that permits finding new lenders in the event of FBN’s inability to fund the project. Bello reaffirmed GHL’s commitment to protecting its commercial and economic interests through arbitration and legal channels.
The unfolding conflict underscores the complexities of financing large-scale oil projects and the need for transparent adherence to contractual obligations to foster trust and collaboration in the industry.
