Shell Plc, ExxonMobil Corp., Chevron Corp. and Equinor ASA plan to withdraw multibillion-dollar lawsuits against Nigerian National Petroleum Company (NNPC) Ltd. after finalising new terms for deep-water oil production in the country, reports Bloomberg.
In letters to two New York federal judges on August 22, the oil majors said they had agreed to settle with NNPC and will terminate ongoing litigation once the new arrangements take effect.
The move came 10 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 US four years ago asking a court to enforce a $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 $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 incentivise 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 licence on August 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.