ExxonMobil Corp., Shell Plc, Chevron Corp. and Equinor ASA have agreed to drop the multibillion-dollar lawsuits against the Nigerian National Petroleum Company (NNPC).
This is in view of the finalizing new terms for deep-water oil production between the partners and the Nigeria’s national oil company.
Nigeria is Africa’s largest crude oil producer in letters sent to two New York federal judges on August 22, the oil majors confirmed that they had agreed to settle with the Nigerian National Petroleum Co. and will terminate ongoing litigation once the new arrangements take effect.
The settlements came 10 days after the international oil 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.
It will be recalled that 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 incentivize 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. In a separate letter, Exxon and Shell said they should be able to do the same after 60 days.
The extension of Equinor’s license on August 12 “was an important milestone” that “secures continued production and cash flow,” a spokesman told Bloomberg by email.
“All outstanding disputes in Nigeria have also been resolved as part of the renewal agreement,” the spokesman said.
None of the international companies have been able to make public statements. The NNPC has also not made public statement.