The legal conflict between Femi Otedola’s First Bank and Nduka Obaigbena’s General Hydrocarbons Limited has escalated further, as the Federal High Court in Port Harcourt issued a landmark ruling ordering the arrest and detention of crude oil cargo aboard the FPSO Tamara Tokoni.
This ruling, enforced by the Nigerian Navy, adds another dimension to the ongoing dispute over an alleged debt of $225.8 million, a figure First Bank claims General Hydrocarbons owes.
This legal confrontation involves two prominent figures in Nigeria’s corporate world: Femi Otedola, one of Africa’s leading entrepreneurs and philanthropists, and Nduka Obaigbena, Chairman and Editor-in-Chief of THISDAY Newspapers and ARISE Media Group, who also owns General Hydrocarbons.
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Court’s Directive
On 9 January 2025, Justice E.A. Obile of the Federal High Court in Port Harcourt ruled that the crude oil cargo on the FPSO Tamara Tokoni, owned by General Hydrocarbons, must be detained. The detention will remain in effect until the company provides a $19.7 million guarantee from a first-class Nigerian bank, alongside accrued interest and legal costs.
The ruling mandated cooperation from several government agencies, including the Nigerian Navy, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Nigerian Maritime Administration and Safety Agency (NIMASA), and Nigerian Ports Authority (NPA).
These agencies were instructed to ensure the enforcement of the arrest order and provide constant surveillance around the cargo to prevent any unauthorized movement. The court’s aim is to ensure that the crude oil cargo remains secure until all legal conditions are fulfilled. The matter is adjourned for a substantive hearing on 9 February 2025.
Origins of the Dispute
The conflict originates from a loan facility granted by First Bank to General Hydrocarbons for the operation of Oil Mining Lease (OML) 120, an offshore oil block. Under the agreement, First Bank financed the operational needs of OML 120, with an understanding that profits from the block would be shared equally between the bank and the oil company.
First Bank, however, alleged that General Hydrocarbons defaulted on the repayment of its loans, with the debt ballooning to $225.8 million as of September 2024. To recover its funds, the bank filed a debt recovery suit against Obaigbena, his company, and his family members who hold directorial roles in General Hydrocarbons.
The bank successfully secured an order from the Federal High Court in Lagos, freezing the accounts and assets of General Hydrocarbons and its directors in all Nigerian commercial banks.
General Hydrocarbons’ Counterclaims
General Hydrocarbons has consistently denied defaulting on its loan obligations. Through its legal representatives, Abiodun Layonu & Co, the company accused First Bank of breaching the loan agreement by failing to disburse funds on time, which it claims severely hampered its operations on OML 120.
The company also obtained a court injunction in December 2024, restraining First Bank from making demands, enforcing securities, or hindering its access to credit facilities essential for OML 120 operations. General Hydrocarbons labeled the bank’s subsequent actions, including obtaining an asset freezing order, as an “abuse of court process” and a deliberate attempt to undermine the company’s business.
In a public statement, General Hydrocarbons accused First Bank of ignoring the December court ruling and misleading the public about the nature of the dispute.
First Bank’s Position
First Bank has maintained that its actions are within the bounds of the law and that the asset freezing order does not violate the earlier court injunction. The bank insists that its primary goal is to recover the funds loaned to General Hydrocarbons, as the debt poses significant risks to its financial stability.
Broader Implications for the Troubled Energy Sector
The prolonged standoff raises questions about the investment climate in the country, especially in an industry already grappling with declining foreign investments and operational challenges.
Energy analysts believe it could send a worrying signal to investors who prioritize legal and financial stability when making decisions.
Furthermore, experts believe the implications could be far-reaching for both parties. For First Bank, recovering the alleged debt is critical for maintaining its balance sheet and investor confidence. For General Hydrocarbons, the outcome of the legal battle could determine the future viability of its operations on OML 120.
The next court session in February 2025 is expected to provide further clarity on the legal arguments and potentially set a precedent for similar disputes in the oil and gas sector.