The long-running financial dispute between General Hydrocarbons Limited (GHL) and First Bank of Nigeria Limited (FirstBank) over the funding of Oil Mining Lease (OML) 120 has taken a decisive turn. A Lagos-based arbitral tribunal has ordered GHL to pay FirstBank $112,100 and ₦111 million in costs, after dismissing GHL’s claims that the bank had breached an alleged funding obligation under a 2021 Subrogation Agreement.
Presiding arbitrator, Justice Kumai Bayang Akaahs, delivered the ruling on Tuesday, rejecting GHL’s argument that the bank was under an “absolute obligation” to finance the full exploration, development, and production of OML 120. The tribunal held that FirstBank’s funding responsibilities were clearly conditional and had, in fact, been fulfilled through multiple disbursements over the past three years.
The Dispute and the Agreement
According to arbitration filings obtained by Nairametrics, GHL and FirstBank executed a Subrogation Agreement on May 29, 2021, to guide financing for OML 120’s development. The arrangement was designed to ensure that the oil lease’s exploration and production costs were adequately funded, while allowing both parties to share in the project’s commercial gains.
However, GHL later accused the bank of breaching the agreement, claiming FirstBank failed to provide sufficient funding. Represented by Paul Usoro, SAN, the company sought declarations that the bank was obligated to finance OML 120 unconditionally and demanded significant monetary compensation.
Among its requests, GHL asked the tribunal to compel the bank to pay £1.35 million, $14.43 million, and ₦5.2 billion, as reimbursement for expenses it claimed to have incurred due to FirstBank’s alleged failure to meet its obligations. The company also sought injunctions restraining the bank from publicizing that GHL was indebted to it in the sum of $718 million.
FirstBank’s Defence
In response, FirstBank’s legal team — led by Prof. Gbolahan Elias, SAN, and Babajide Koku, SAN — maintained that the Subrogation Agreement did not impose any unconditional funding duty on the bank. They argued that the contract reflected a standard lender–borrower relationship, consistent with the Central Bank of Nigeria’s Prudential Guidelines for Deposit Money Banks (2019).
The bank contended that it had already provided substantial financial support to GHL, emphasizing that each funding request required proper review and approval.
Tribunal’s Findings
Justice Akaahs, in his detailed ruling, agreed with FirstBank’s interpretation. He affirmed that while the agreement required the bank to finance the OML 120 project, that obligation was not absolute, but subject to credit evaluation and compliance with regulatory guidelines.
Evidence before the tribunal showed that FirstBank had advanced several loans to GHL totaling $185 million between June 2021 and January 2024, in tranches of $10 million, $110 million, $40 million, and $25 million.
“The respondent did not fail, delay, or breach its obligations under the Subrogation Agreement,” Justice Akaahs held. “The respondent’s funding obligation is conditional and has so far been fulfilled through cumulative disbursements of $185,000,000.”
He further ruled that the bank bore no responsibility for any “losses or unproductive time” claimed by GHL.
Consequently, the tribunal ordered GHL to pay $112,100 and ₦111 million as costs within 30 days, with a 10% annual interest to apply if payment is delayed.
Context and Legal Background
This ruling comes against the backdrop of an earlier Court of Appeal decision in September 2025, which had overturned a Federal High Court judgment in Port Harcourt favoring GHL. The appellate court sided with FirstBank, ruling that proceeds from the sale of crude oil aboard the FPSO Tamara Tokoni — pledged as security for GHL’s loans — had been wrongfully diverted.
That decision, delivered by a panel led by Justice E.A. Obile, reinstated the bank’s enforcement rights and directed the Admiralty Marshal and Chief Registrar of the Court of Appeal to secure the crude cargo pending the outcome of related proceedings.
The latest arbitral ruling further consolidates FirstBank’s legal standing in the ongoing OML 120 dispute — a case that has drawn attention for its complex intersection of energy financing, contractual interpretation, and Nigeria’s evolving oil-sector investment dynamics.