Nigeria reaches “outline” settlement with oil firms on owed payments -FT

NNPC

LAGOS Nov 8 (Reuters) – Nigeria has reached an “outline settlement” worth $5 billion with five oil majors to cover outstanding payments for joint exploration and production, the Financial Times said on Tuesday.

The OPEC member’s state oil firm NNPC has over years piled up unpaid bills, so-called cash calls, that it was obliged to pay under joint ventures with Western oil firms, with which it explores for and produces oil.

Nigerian Oil Minister Emmanuel Ibe Kachikwu said Royal Dutch Shell, Exxon Mobil, Italy’s ENI, Chevron and France’s Total had “accepted” the $5 billion deal, according to the FT’s website.

Shell and Chevron declined to comment in response to enquiries by Reuters. The others were yet to respond.

The payments would be made in the form of new oil production, the FT said, quoting the minister and “people close to Western companies”. There would also be a one-off cash payment.

The agreement would hopefully be finalised by the end of the year and cover the period from 2010 to 2015, the paper said.

Kachikwu has been trying to reduce the financial obligations for more than a year.

The delay in payments has hindered oil and gas investment in the West African nation and worsened a budget crisis as the government seeks to increase spending to drag Africa’s biggest economy out of recession.

Nigeria’s oil and gas output had been relatively stagnant for years, until militants started a wave of attacks in January to fight for a greater share of oil revenues. (Reporting by Ulf Laessing, LIbby George and Dmitry Zhdannikov; Editing by Dale Hudson)

Reuters