Reports reaching Nairametrics reveals Transcorp has sued SacOil over OPL 281. The company is said to be claiming damages over a contract it signed with the South African Oil Company. Transcorp had in 2011 signed a joint venture (JV) agreement with SacOil Holdings Limited of South Africa (SacOil) to develop OPL 281 in collaboration with Energy Equity Resources Limited (EER).
The contract
The ownership of the Joint Venture would be shared among SacOil Holdings Limited acquiring 20%, EER 281 Nigeria Limited, a subsidiary of Equity Energy Resources, controlling 20% and Transcorp retaining the residual 60% in the oil block.
Transcorp however revised the contract in February 2012 when the Tony Elumelu owned Hiers Holdings took over the company. Back then it claimed to have revised the terms as a result of a change of control in Transcorp. In conformance with the change, Transcorp was to take full responsibility for the operation of the block in its bid. Part of the deal also required that Transcorp remain the operator of OPL 281 and will pay 60% of the costs to first production. In the previous agreement, SacOil and EER carried 100 per cent of the costs. Transcorp will also post the performance bond to the Nigerian government.
SacOil Holdings in February this year then announced its withdrawal of the Nigerian Oil market citing weaker oil pricesas part of its ongoing portfolio rationalisation.
Why the court case?
According to SacOil’s press release, Transcorp was suing them because of it’s termination of the Farm Out and Participtation Agreement (FoPA) was wrongful and amounted to a repudiation of the FoPA. According to SacOil, Transcorp wrote them a letter acknowledging the termination of the Farm-out and FoPA and confirmed the effective date of such termination as 3 December 2014. SacOil also claimed that Transcorp further acknowledged its liability in writing to SacOil and agreed to refund the farm-in fees and interest thereon in line with the provisions of the FoPA, requesting SacOil to provide Transcorp with written details of the bank account into which payment would be made. According to SacOil, the only contention from Transcorp at that time was the interest rate applicable to the refund although such interest rate was clearly stipulated in the FoPA.
SacOil claimed it paid $12.5 million towards farm-in fees on 28 February 2011, which fees contractually are to be refunded with interest by Transcorp.
