N240bn debt: AMCON, Pan Ocean reach out-of-court settlement

Asset Management Corporation of Nigeria (AMCON) and Pan Ocean Oil Corporation Nigeria Limited have agreed to an out-of-court settlement pending the consent of a Federal High Court over a N240-billion debt to a consortium of Nigerian banks.

The consent of the Federal High Court will end the debt dispute between AMCON, Pan Ocean and other syndicate of lenders.

Pan Ocean and subsidiaries took the loan facility from a syndicate of Nigerian banks to finance their various businesses including the development of Oil Prospecting Licences, Oil Mining Licences, construction of the 200mmscf/day Ovade-Ogharefe Gas Processing Plant and construction of the 67km, 20” Amukpe-Escravos Oil Pipeline.

Some of the projects partly funded by Pan Ocean with proceeds of the loans are ground-breaking and will significantly boost infrastructure in the Nigeria oil and gas industry. The projects include the Amukpe-Escravos pipeline, a 67-kilometre 20-inch, low-risk underground pipeline that will evacuate crude oil from Amukpe-Escravos export terminal, with a delivery capacity of 160,000 barrels of crude oil per day.

Pan Ocean also invested in the development of other oil and gas assets, including a PSC awarded in 2007, which is currently producing an estimated 45mmscf and 3,400bopd.

AMCON and Pan Ocean have been in court for a number of years but early this month, both parties, desirous of a positive outcome resorted to an out-of-court settlement.

According to AMCON, this decision was in line with its role as a resolution vehicle to help stabilise and revitalise the Nigerian banking system and economy.

Confirming the settlement, Pan Ocean’s management remarks that the settlement is welcomed and allows the businesses to focus on its core operations.

“We acknowledge the effort of Pan Ocean and related companies to transform the oil and gas industry, and are committed to ensuring that the divestment reduces the gearing level of the organisation, while supporting Pan Ocean towards its goal of continued financial health,” senior officials at AMCON states.

AMCON further notes that the agreement with Pan Ocean reflects her commitment to support Nigerian companies with a proven business case to remain afloat in the face of macro-economic challenges.

Established almost 50 years ago, Pan Ocean is one of the original seven companies with which the Federal Government of Nigeria, through the Nigerian National Petroleum Corporation (NNPC), signed participation agreements in 1979.

Pan Ocean has remained committed to the development of the oil and gas industry in the country, through extensive investment in assets to support oil and gas production and communities and local content policy implementation. Pan Ocean Oil Corporation was also the first Nigerian oil company to eliminate gas flaring under the Kyoto Protocol, and earn carbon credits for the Federal Government of Nigeria.