Nigeria moves to resolve disputes with IOCs on oil exports, sharing pacts
By Oludare Mayowa
With the signing of the preliminary agreement with two oil companies last week by the Nigerian National Petroleum Corporation (NNPC), the stage is set for the West African country to resolve all disputes with International Oil Companies (IOCs) on oil exports.
Nigeria last week announced that it has signed a dispute resolution agreement with two oil firms, China National Offshore Oil Corporation (CNOOC) and South Atlantic Petroleum (SAPETRO) related to Oil Mining Lease (OML) 130 Production Sharing Contract.
The state-run oil firm said the agreement “signifying a major milestone towards the resolution of all disputes related to Oil Mining Lease (OML) 130 Production Sharing Contract.”
Industry observers said the move by the NNPC may further strengthen the relationship between the country and the IOCs over issues arising from the production sharing agreements on oil productions in the country.
OML 130 consists of producing fields such as Akpo and the giant ultra-deepwater Egina oilfield. France’s Total, via its Nigerian subsidiary, operates OML 130 with a 24-percent interest, in partnership with NNPC, SAPETRO, CNOOC E&P Nigeria Limited, and Petrobras Oil and Gas BV.
Nigeria, which depends largely on crude oil exports for 60 percent of its revenue and around 90 percent for foreign exchange earnings has accused many IOCs of not declaring data on oi exports, thereby depriving the country of huge revenue that should have accrued to it.
The OPEC member country has also accused the IOCs of not complying with the 1993 law that entitles Nigeria to reap a higher share of revenues if oil prices are above $20 a barrel.
Last year, President Muhammadu Buhari has assented to the Bill amending the Deep Offshore (and Inland Basin Production Sharing Contract) Act, in a bid to boost income from the petroleum industry and enhance the finance of Africa’s biggest economy.
The amendment is expected to boost the country’s income from revenue sharing review with its joint venture partners deep offshore oil fields, to reflect current realities.
It was not clear how the government has benefited from the new regulations since it was signed into law by the President in November last year as the outbreak of coronavirus pandemic has disrupted global crude oil market, leading to the sharp drop in prices.
The government, however, is still in court over claims that international oil majors owe it $62 billion in oil revenues because they haven’t complied with a 1993 law that entitles Nigeria to reap a higher share of revenues if oil prices are above $20 a barrel.
In 2016, Nigeria sued the oil majors, including Chevron, Shell, Eni, and Total, claiming that the foreign oil firms failed to declare $12.7 billion worth of Nigerian oil exports to the United States in the period between 2011 and 2014.
Many of the oil companies, have debunked the country’s claims and are challenging the government suit in court with a view to vacate whatever injunction against it.
However, analysts said with the signing of the agreement on the disputed OML 130, Nigeria may be on the way to resolve all major disputes with the IOCs operating in the country.
The analysts, however, insisting that unless the government accelerate effort in passing the much-awaited Petroleum Industry Bill (PIB), the future of oil production in the country remain shaky as major oil firms are seeking opportunity in more viable environment.#GFD