Allocation of crude battle: Shell, ExxonMobil, Chevron, one other to withdraw $2.9bn lawsuits against NNPC
By Uthman Salami
The oil majors led by Shell Plc, ExxonMobil Corp., Chevron Corp. and Equinor ASA, have commenced plans to withdraw $2.9 billion suits filed against the Nigerian National Petroleum Company Limited formerly Nigerian National Petroleum Corporation over a long battle of allocation of crude.
The multibillion-dollar lawsuits against Nigeria National Petroleum Company Limited are reportedly under consideration for withdrawal after finalizing new terms for deep-water oil production in Africa’s largest crude producer.
In letters to two New York federal judges on Aug. 22, which were sighted by Bloomberg, the oil majors said they had agreed to settle with the Nigerian National Petroleum Co.
They agreed to terminate ongoing litigation once the new arrangements take effect.
These recent actions by the oil majors came days after the firms renewed leases with the Nigerian government and production-sharing contracts with the NNPC for the permits at the heart of long-running disputes over the allocation of crude.
Equinor and Chevron filed a suit in the U.S. four years ago asking a court to enforce a $1.1 billion award issued by an arbitration tribunal against the NNPC in 2015.
In a similar move, Shell and Exxon initiated the same proceedings in New York in 2014 over a $1.8 billion arbitration award.
Both penalties followed allegations by the majors that the NNPC took crude beyond its entitlement under contracts signed in 1993 that were designed to incentivize the companies to develop deep offshore blocks.
Lawyers for Equinor and Chevron asked the judge to suspend the case until the end of October “to allow sufficient time for the conditions to be satisfied and for the settlement agreement to become effective.”
Once that happens, the companies “expect to withdraw this action,” the letter said. Exxon and Shell anticipate being able to do the same after 60 days, they said in a separate letter.
The extension of Equinor’s license on Aug. 12 “was an important milestone” that “secures continued production and cash flow,” a spokesman said by email.
“All outstanding disputes in Nigeria have also been resolved” as part of the renewal agreement, he said. Shell declined to comment while Exxon, Chevron and the NNPC didn’t immediately respond to requests for comment.
