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Business News of Thursday, 25 August 2022

Source: www.premiumtimesng.com

ExxonMobil, Shell agree to end lawsuits against NNPC over oil contracts -- Report

File photo to illustrate the story File photo to illustrate the story

Four international oil companies have agreed to end lawsuits they filed in the United States against Nigeria’s state-owned oil company, after signing a contract extension on production sharing agreements.

Bloomberg reported Wednesday quoting 22 August letters to two New York federal judges as saying that the four major oil companies which include Shell Plc, ExxonMobil Corporation, Chevron Corporation, and Equinor have agreed to settle with the Nigerian National Petroleum Company (NNPC) Limited and will terminate ongoing litigation once the new arrangements take effect.

The development came days after NNPC Limited signed a contract extension with the oil majors. The firm had on 12 August signed a contract extension with its international partners for five major oil blocs.

The agreement according to NNPC Limited could put to an end the protracted dispute between the state-owned company and the contractor parties in Oil Mining Leases (OMLs) 128, 130, 132 and 133, as well as 138 PSCs.

“The deal was part of the corporation’s dispute resolution and renewal strategy of 2017, aimed at securing out-of-court settlement of all disputes around the 1993 PSC and agreeing on terms for their renewal,” the Group Chief Executive Officer of the NNPC Limited, Mele Kyari, said while speaking at the signing event.

According to Bloomberg, 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.

It noted that Exxon and Shell, in a separate letter, said they anticipate being able to do the same after 60 days.

Equinor and Chevron filed a suit in the United States asking a court to enforce a US$1.1 billion award issued by an arbitration tribunal against the NNPC in 2015.

Shell and Exxon initiated similar proceedings in New York in 2014 over a US$1.8-billion arbitration award.

Both suits 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.