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UK Oil Producer Sees Shares Tumble 70% On Loan Fraud

London-listed oil producer Lekoil has suspended trade in its shares amid a budding scandal involving a loan from a company claiming to act on behalf of the Qatar sovereign investment fund.

Alliance News reports Lekoil had agreed a $184-million loan with representatives of the Qatar Investment Authority earlier this month, to be used for the development of an offshore field, Ogo, in Nigeria.

The funding, according to Energy Voice, was to go towards the drilling of two exploratory wells during the second half of this year. Lekoil is currently surveying the area.

More than a week after Lekoil entered the loan agreement, other representatives of the Qatari sovereign wealth fund approached the company to express suspicions about the validity of the loan. Ultimately, it was established the Qatari Investment Authority had no knowledge of any loans with Lekoil.

"Lekoil is urgently seeking to establish, alongside its legal counsel and nominated adviser, the full facts of this matter, and pending this clarification, the company has requested that its ordinary shares be suspended from trading on AIM with immediate effect," the company said this week.

The Financial Times meanwhile reported that the loan agreement had involved an intermediary: a Bahamas-based company called Seawave Invest. Seawave Invest connected Lekoil with people who claimed they were representatives of the QIA but, according to Lekoil, had “constructed a complex facade in order to masquerade as representatives” of the fund. The company added it had paid $600,000 to Seawave Invest.

The FT recalls this is not the first time a Nigerian-focused oil company has had trouble. In 2018, Lekoil’s partner in the Ogo field was found guilty of money laundering and fraud, for example. Lekoil bought off Afren and currently has 40 percent in the field. However, the company is looking to sell on the 22.86 percent it bought from Afren. The operator and majority shareholder in the field is Nigerian Optimum.

By Irina Slav for Oilprice.com

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