Indigenous oil giant Nestoil Group has fired back at what it calls an “unlawful and oppressive” receivership order on its affiliate Neconde Energy’s stake in Oil Mining Lease (OML) 42, accusing lenders of judicial overreach and transparency lapses that threaten to stall up to 40,000 barrels per day of crude production in the Niger Delta. The escalating dispute, rooted in a disputed $1.01 billion syndicated loan, has frozen assets, sealed offices, and drawn in state security forces, spotlighting vulnerabilities in Nigeria’s push for local content in the oil sector amid economic pressures.
Background on the Dispute
OML 42, located in the swampy heart of Delta State in the Western Niger Delta, is a jewel in Nigeria’s upstream portfolio, once pumping over 250,000 barrels per day in the 1970s but hampered by militancy, pipeline vandalism, and operatorship battles. Neconde Energy Limited—80% owned by Nestoil and 20% by partners including Yinka Folawiyo Petroleum and Kofa Offshore Ventures—acquired a 45% stake from Shell, Total, and ENI in 2012 for $585 million, with $435 million in equity and $150 million in debt. The Nigerian National Petroleum Company Limited (NNPCL) holds the remaining 55% via its subsidiary, Nigerian Petroleum Development Company (NPDC).
The crisis erupted in August 2025 when FBNQuest Merchant Bank Limited (facility agent) and First Trustees Limited (security trustee)—both FBN Holdings subsidiaries—appointed Abubakar Sulu-Gambari (SAN) as receiver/manager over an alleged default on a $500 million syndicated loan from 2015, ballooned to over $1.01 billion plus ₦430 billion in interest and penalties. Lenders, including Access Bank, Afreximbank, Zenith Bank, UBA, Fidelity Bank, FCMB, and Union Bank, claim non-repayment despite production ramps post-Forcados pipeline repairs in 2017.
On October 15, 2025, Justice Dehinde Dipeolu of the Federal High Court, Lagos, granted an ex parte Mareva injunction freezing Nestoil and Neconde’s bank accounts, shares, and assets across 20+ institutions (e.g., GTBank, Citibank, Stanbic IBTC). The order empowered Sulu-Gambari to seize Nestoil’s Victoria Island headquarters at 41-42 Akin Adesola Street, manage Neconde’s OML 42 interests, and even sell crude—with Nigerian Navy, DSS, and Marine Police assistance. On October 28, armed police enforced the sealing, evicting staff and barricading the premises, sparking viral outrage.
Nestoil, founded in 1991 by Ernest Azudialu-Obiejesi as Nigeria’s largest indigenous EPCC firm, insists the debt figures are “opaque and incorrect,” demanding forensic audits. In court filings, the company revealed repeated unanswered requests for bank statements (e.g., emails from February to June 2024), accusing FBNQuest of bypassing due process to rush the orders.
Nestoil’s Accusations and Legal Counteroffensive
Nestoil and Neconde jointly petitioned the National Judicial Council (NJC) on November 7, 2025, halting Lagos court proceedings pending investigation into Justice Dipeolu’s “judicial overreach.” Key grievances:
- Lack of Verification: Orders froze third-party assets like Nestoil Tower without ownership checks; Neconde, not a loan party, was wrongly included.
- Security Overkill: Authorizing military/DSS for civil enforcement contravenes injunctions’ preservative intent, risking operational chaos.
- Transparency Void: Lenders refused account statements, relying on “computed figures” amid improved OML 42 output (recently hitting 40,000 bpd after years of decline).
On November 5, Nestoil sued eight Nigerian banks and Afreximbank in Abuja’s Federal High Court, seeking injunctions against receivership enforcement and declarations of lender oppression. The suit argues the action endangers national energy security, with OML 42’s shutdown potentially costing $2.8 million daily at $70/barrel, plus job losses for thousands in the Delta.
Nestoil maintains operations are “fully functional” across subsidiaries in oil, gas, power, and infrastructure, but warns of cascading effects: stalled salaries, supplier payments, and Niger Delta community projects.
Impact on Production and the Niger Delta
OML 42’s current 40,000 bpd—up from post-militancy lows—feeds Nigeria’s OPEC quota, with revenues funding HYPREP cleanups and local content. The receivership risks immediate halts, as frozen funds block maintenance, JV payments to NNPCL, and crude lifts. Industry watchers fear broader chills on indigenous financing, echoing 2018 threats when Nestoil eyed asset sales amid $558 million debts.
In the Niger Delta, where oil theft siphons $3 billion yearly, the tussle amplifies tensions: communities reliant on Neconde’s CSR (scholarships, clinics) brace for disruptions, while militants could exploit the vacuum. The Chartered Institute of Treasury Management (CITM) urged firms to bolster financial discipline, calling Nestoil a “cautionary tale” for leveraged locals.
Government and Stakeholder Response
As of November 12, 2025, the NJC has acknowledged the petition but issued no ruling; Lagos court adjourned to November 7 (pre-petition), with Abuja hearings pending. NNPCL and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) were ordered to aid the receiver but face Nestoil’s pushback. FBNQuest defends the orders as standard for debt recovery, citing “eroded trust.”
Experts like those at ISS Africa warn of eroded investor confidence, urging mediated settlements to safeguard output. Internationally, Afreximbank’s involvement highlights pan-African financing risks.
Broader Implications for Nigeria’s Oil Sector
This saga tests the 2010 Local Content Act’s promise: indigenous firms like Nestoil drove $10 billion in divestments, but debt burdens—exacerbated by 2014-2016 crashes and Delta insecurity—threaten sustainability. A prolonged fight could spike national losses by $1 billion annually, undermining Tinubu’s 2.1 million bpd target. Calls grow for regulatory arbitration via the Petroleum Industry Act’s frameworks to balance creditor rights and energy stability.
Community Demands
Nestoil echoes industry pleas:
- Audit and Transparency: Lenders provide statements for independent forensics.
- Lift Freezes: Provisional orders to resume OML 42 ops and payments.
- NJC Probe: Full inquiry into judicial conduct.
- Mediation: Multi-stakeholder talks involving DPR, NNPCL, and CBN.
Voices from the Ground
- Ernest Azudialu-Obiejesi, Nestoil Founder: “This is not just about one company—it’s an assault on Nigeria’s indigenous dreams. We demand due process to protect jobs and production.”
- Delta Community Leader (Anon.): “Neconde’s rigs keep our youths employed; shutdowns breed unrest. Government must intervene before militants return.”
- CITM Spokesman, Tunde Akeju: “Leveraged growth without treasury rigor leads here—time for sustainable models.”
Niger Delta Herald will monitor NJC outcomes and production impacts.
