Court upholds senior lenders’ rights over Nestoil's Neconde US$1.2bn OML 42 interest

The Federal High Court in Lagos has upheld the rights of Glencore Energy UK Limited, Africa Finance Corporation (AFC), Mauritius Commercial Bank Limited and Fidelity Bank Plc, the Senior Lenders to Neconde Energy Limited, over the company’s interest in the OML 42 Joint Venture, in a dispute involving assets valued at approximately US$1.2 billion.

The judgment, delivered on 30 September 2026, sets aside the enforcement of a subsequent security over Neconde’s assets by a separate group of lenders to Nestoil.

At the centre of the dispute was a Deed of Charge dated December 2022, through which the subsequent lenders sought to establish security over assets connected to Neconde, including its 45% interest in OML 42. The Senior Lenders challenged the enforcement of the security, arguing that it was subordinate to their existing security and had been created in breach of a negative pledge in their favour.

The court held that the Senior Lenders’ first-ranking security takes priority and that the subsequent security could not be enforced ahead of it. The court also found that the Deed of Charge relied upon by the subsequent lenders had not crystallised, meaning it could not support the appointment of a Receiver/Manager over Neconde or its OML 42 interest.

The court consequently declared the Receiver/Manager’s appointment invalid and set it aside, while restraining further enforcement steps against Neconde and its OML 42 interest until the relevant security crystallises.

Neconde holds a 45% interest in OML 42, with the remaining interest held by NNPCL’s upstream business. The asset was acquired by Neconde in 2011 and has subsequently formed a central part of the company’s financing arrangements.

The ruling is significant for Nigerian secured lending and energy finance, particularly on the enforceability of negative pledge provisions and the priority of competing security interests. It confirms that a subsequent creditor cannot simply enforce a competing charge where senior security remains in place and the contractual conditions for enforcement have not been satisfied.

The decision also separates the rights of Neconde as asset owner from the wider debt recovery proceedings involving its affiliate, Nestoil Limited. The latest judgment was specifically concerned with whether the subsequent lenders could enforce their security against Neconde and its OML 42 interest.

Templars represented the senior lenders in the matter. The TEMPLARS team was led by Dispute Resolution Partner Olufemi Oyewole, SAN, FCIArb, with Managing Counsel Chidiebere Ejiofor; Senior Associates Collins Ogbu, Nosakhare Iyamu and Oluyemi Adebo; and Associates Olanrewaju Awe and Uzoamaka Ikpeazu. Transaction advisory support was provided by Partner Zelda Akindele, with Senior Associate Victor Sameria and Associate Victoria Gordo.