William Clowes 08/04/2022

(Bloomberg) – The owners of an oil production and storage vessel had a history of financial problems before the vessel exploded in Nigerian waters two months ago.

The Trinity Spirit, which caught fire on February 2, burned for more than 24 hours and left a patch of crude stretching for miles across the Atlantic Ocean. Although the cause of the accident has not yet been determined, “hell” meant that only a “low level” of crude oil was spilled, according to Idris Musa, director general of the Nigerian National Detection Agency. and oil spill response. The Ministry of the Environment estimates that up to 60,000 barrels of oil were on board the ship at the time of the fire.

The fatal incident happened amid an ongoing trail of debt. Creditors have filed lawsuits against the company operating the vessel, Shebah Exploration and Production Co., registered in Nigeria, in at least three countries, accusing the company of defaulting on several financial agreements. These include two bank loans totaling $220 million and a contract for the management of the ship itself, according to court documents and company filings.

Founder of Seplat

Ambrosie Bryant Orjiako, a prominent businessman and chairman of Shebah, acted as personal guarantor for a $150 million loan taken out by the company in mid-2012 from the African Export-Import Bank and two Nigerian lenders to fund the company’s oil drilling program. Licence. Shebah leased the vessel from one of its shareholders named Allenne Ltd., a company registered in the British Virgin Islands of which Orjiako was a director, according to court documents.

Orjiako is best known as the founder of Seplat Energy Plc, which since 2009 has become Nigeria’s largest independent oil producer and agreed in February to pay $1.3 billion for Exxon’s shallow water assets. Mobil Corp. in the country. Seplat has no involvement with the Spirit of the Trinity or any of Shebah’s legal disputes, Orjiako said by email, declining to comment on matters that are still before the courts. He referred questions about the ship to Shebah’s general manager, Ikemefuna Okafor, who did not respond to emails or calls. Orjiako announced in November that he would step down as chairman of Seplat in May.

Shebah stopped repaying the Afreximbank loan after meeting a single installment of $6.1 million, according to a lawsuit filed by the UK lenders against the company, Allenne and Orjiako. In February 2016, a judge ruled the banks were entitled to $143.9 million, which remains unpaid and doubled with interest, Afreximbank said in a statement. Banks “continue to review their recovery options,” Afreximbank said through its law firm Baker McKenzie.

Orjiako, 61, had argued that Afreximbank’s delays in releasing funding had led drilling contractors to withdraw or suspend their services, according to a defense he submitted to the London court in September 2015. British judge rejected an appeal by Shebah and Orjiako against the decision in mid-2017.

OML 108

Shebah acquired a 40% stake in a license known as Oil Mining Lease 108 from ConocoPhillips in 2004 while Allenne purchased the Trinity Spirit from the Houston-based producer. Shebah agreed to bear all costs in exchange for 80% of the block’s revenue.

Production levels would not return to Conoco’s 20,000 barrels per day since licensing, with no recorded production since 2017, according to data released by the Nigerian state-owned energy company. The government announced in 2019 that it was revoking the permit, without specifying why. A spokesperson for the Nigerian Upstream Petroleum Regulatory Commission did not respond to questions about the license withdrawal.

Shebah is also under pressure from other creditors. Last year, a federal court in Lagos granted Zenith Bank Plc, one of Nigeria’s biggest lenders, an injunction preventing certain companies from dealing with Shebah’s assets in a dispute over a $70 million loan. granted in 2014 to the Orjiako company. Zenith said it does not comment on cases that are before the courts.

A Houston-based oil services company, Alliance Marine Services, claimed it terminated a management contract for the Trinity Spirit after Shebah ran up $5 million in arrears, according to a case filed in US federal court in 2009. The Claimant said he had also initiated arbitration proceedings in the UK to try to recover the money. AMS voluntarily dismissed the lawsuit several months after it was filed and it is unclear whether the dispute has been resolved. Bloomberg could not reach AMS.

Shebah and two other companies linked to Orjiako were ordered by a British court in 2020 to pay $4.3 million to a Greek shipping company after the trio defaulted on a 2017 deal to charter a tanker.

In 2019, a federal court approved the appointment of a receiver by the state debt collection agency, Asset Management Corp. of Nigeria, or Amcon, to manage Shebah. Before the fire, the oil company, still in receivership, had offered the Trinity Spirit to Amcon to reduce part of its debt, according to a spokesperson for the government body. Amcon is trying to recover some of the loans made by local lenders in 2012, which the agency has since taken over from one of the three banks.