Foreign Oil Companies Agree To Resolve Disputes With NNPC Over Oil Contracts

Following the conclusion of a contract extension on production sharing agreements, four foreign oil corporations have agreed to drop lawsuits they had brought against Nigeria's state-owned oil company in the United States.

The four major oil companies, including Shell Plc, ExxonMobil Corporation, Chevron Corporation, and Equinor, have agreed to settle with the Nigerian National Petroleum Company (NNPC) Limited and will end ongoing litigation once the new arrangements take effect, according to Bloomberg on Wednesday, citing letters written on August 22 to two federal judges in New York.

A contract extension with the oil majors was signed by NNPC Limited just days before to the development.

With its international partners, the company had extended a contract for five significant oil blocks on August 12.

According to NNPC Limited, the agreement could put an end to the protracted legal battle between the state-owned firm 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, the attorneys for Equinor and Chevron requested that the lawsuit be put on hold until the end of October to give them enough time to fulfil the requirements and bring the settlement agreement into force.

The letter stated that the corporations "intend to withdraw this action" after that.

It mentioned that Exxon and Shell had stated in a different letter that they expected to be able to do the same thing after 60 days.

In a lawsuit filed in the United States, Equinor and Chevron asked a judge to uphold a 2015 arbitration judgement of US$1.1 billion made against the NNPC.

In 2014, Shell and Exxon started related legal actions in New York about an arbitration award worth US$1.8 billion.

Both lawsuits were filed in response to claims made by the majors that the NNPC had overextracted crude in violation of agreements made in 1993 that were meant to encourage the firms to develop deep offshore blocks.