Nigeria agrees to pay $5bn debt to oil companies

Nigeria has reached an outline settlement to resolve a protracted dispute with western energy companies, under which the groups will be paid $5bn to cover exploration and production costs in Africa’s biggest oil-producing nation.
Royal Dutch Shell, ExxonMobil, Eni, Chevron and Total have signed deals relating to this settlement of costs incurred between 2010 and 2015, as they also seek to forge new financing arrangements for their joint ventures in Nigeria.
The settlement, which would be a haircut on the $6bn-plus the western companies claim that they are owed by Nigeria, needs the approval of two government bodies and final sign-off from President Muhammadu Buhari.
Emmanuel Ibe Kachikwu, Nigeria’s minister of state for petroleum resources, told the Financial Times that the deal had been “accepted” by the five companies. It is hoped that it can be finalised before the end of the year.

Western energy companies have taken the lead role in pumping crude from Nigeria, but they have done so in joint ventures with the Nigerian National Petroleum Corporation, the state-controlled oil group.

Exploration and production costs are supposed to be split in the partnerships between the two sides, but western companies have accused NNPC of failing to pay its portion of the expenses, and this has prompted the groups to hold back on vital investment. NNPC has repeatedly queried the amounts it owes, but the settlement is an attempt to draw a line under the dispute.

Oil is the backbone of Nigeria’s economy, and the country has been hit hard by the collapse in crude prices since mid-2014.
People close to some of the five western companies said they could not rule out Nigerian government bodies preventing a final settlement. Shell, Total, Exxon and Chevron declined to comment.

Eni did not immediately respond to requests for comment.