Oil production and storage is a risky business; and not just with respect to bodily injury and property damage, but also the financial health of a company itself. This is a reality currently being experienced by Shebah Exploration and Production Co, after the company’s oil storage vessel caught fire in Nigerian waters and was destroyed with up to 60,000 barrels of oil on board.
The vessel, Trinity Spirt, erupted in flames in early February 2022, reportedly killing a number of its crew. While the cause of the accident is yet to be determined, according to Nigeria’s national oil spill detection and response agency, the amount of crude contaminating the water was less than initially expected, due in large part to the size of the fire.
Unfortunately, the incident has exasperated a number of existing challenges for Shebah, as creditors file lawsuits against the corporate entity and its directors. The claimants have accused the company and key personnel of defaulting on multiple financial agreements, including two bank loans for a combined $220 million, as well as a contract for the vessel’s ongoing management.
According to court documents, Shabah’s president acted as the personal guarantor of a $150 million loan taken by the company to fund a drilling program on its permit; Oil Mining Lease 108. Shabah had previously acquired a 40% interest in this permit from ConocoPhillips, an oil exploration and production company headquartered in the United States.
Trinity Spirt was first launched in 1976 as an oil tanker, before being reconfigured for oil storage in 1997. Shebah leased the vessel from one of its shareholders, Allenne, a company which also shared common managerial control. Allenne had previously acquired the vessel from ConocoPhillips, at the same time the oil licence was acquired by Shabah.