General Hydrocarbons Limited has denied claims by First Bank of Nigeria Plc regarding a $225 million debt, calling the allegations misleading and baseless.

In a statement issued by GHL’s Director of Strategy and Operations, Abdelmuizz Bello, the company criticized recent media reports, labeling the allegations as “befuddling, without merit, and malicious.”

GHL stressed that it had no outstanding debt to FBN and had acted in accordance with legally binding agreements.

“The allegations of a diversion of the monies advanced to GHL are therefore befuddling and without merit, as payments were made by FBN directly to service providers after vetting and approval by its credit and risk teams,” Bello stated.

He furthe noted, “At the end of the day, FBN became a conflicted lender, risk manager, and operator at the same time, when it got involved in vetting, approving, and paying all invoices. At the same time, FBN also approved and later appointed a CFO for GHL, taking full responsibility for all financial disbursements.”

Bello explained that GHL entered into a Subrogation Agreement with FBN on May 29, 2021, under which FBN was to finance GHL’s exploration and development of OML 120 in exchange for a 50% share of oil profits over eight years.

This profit-sharing arrangement, he noted, was aimed at helping FBN address its non-performing loans and stabilize its financial position.

Bello further clarified that FBN’s debt claims were linked to unrelated NPLs extended to Atlantic Energy, a company managing separate oil fields under Strategic Alliance Agreements.

“In its quest to stay afloat, FBN sold the loan at $600 million as an Eligible Banking Asset (EBA), with comfort from GHL. The bank then collected the cash from the Asset Management Corporation of Nigeria (AMCON), using it to rebuild itself without meeting GHL’s needs,” Bello added.

Citing a Federal High Court judgment in its favor, GHL revealed that FBN had been barred from obstructing its operations or appointing an alternative operator for OML 120. Despite this ruling, FBN allegedly sought and obtained a Mareva injunction from another court, freezing GHL’s accounts.

Bello condemned this as a blatant abuse of judicial processes and reaffirmed that all payments to contractors and service providers involved in OML 120 had been vetted and approved by FBN’s credit and risk teams, making the allegations of fund diversion unfounded.

GHL criticized FBN for failing to meet its funding commitments, highlighting delays in disbursing approved funds, which sometimes lasted up to 70 days. These delays disrupted operations and led to significant financial losses.

Service providers, including Schlumberger and Baker Hughes, were reportedly paid inconsistently, causing inefficiencies and resulting in arbitration awards against GHL.

Despite an initial disbursement of $185 million, FBN’s refusal to provide additional funding has halted the development of OML 120.

GHL asserted that the loan was not yet due for repayment, as it remained within the moratorium period outlined in the Subrogation Agreement.

In 2020, GHL partnered with FBN to develop OML 120 after the bank faced financial exposure from NPLs associated with Atlantic Energy. The arrangement was intended to help stabilize FBN’s finances, with profits from OML 120 shared to offset the NPLs.

GHL claims that FBN failed to meet its obligations by delaying disbursements, leading to significant financial setbacks, including the loss of the Blackford Dolphin drill ship.

As a result, GHL now faces arbitration claims exceeding $100 million.