FG, IOCs Commence Talks On $62bn Dispute
The Federal Government has commenced preliminary talks with international oil companies in a bid to settle a dispute over oil revenue.
Last week, it was reported that Nigeria was seeking to recover as much as $62bn from the IOCs, using a 2018 Supreme Court ruling that enables the Federal Government to increase its share of income from production-sharing contracts.
In a report by Bloomberg on Sunday, the Federal Government still cited the 2018 Supreme Court ruling and argued that it was entitled to the $62bn from the companies after they failed to comply with a 1993 law that handed the state a greater share of income when oil exceeded $20 a barrel.
The companies are, however, challenging the claim.
“We have opened a process of engagement between the parties,” The Minister of Justice, Abubakar Malami, was quoted as saying in the report.
He added, “Whether the discussions will eventually translate to settlement; whether it will translate to opening a full-blown negotiation process is what we will wait to see.”
President Muhammadu Buhari is trying to bolster government funds after crude output and prices dropped.
Nigeria relies on oil for at least two-thirds of state revenue and more than 90 per cent of foreign-currency income.
Most of Nigeria’s crude is pumped by Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., Total SA and Eni SpA, who operate joint ventures with state-owned Nigerian National Petroleum Corporation.
Under production-sharing legislation, the companies agreed to fund the development of deepwater oil fields on the basis that they would share profit with the government after recovering their costs.
Crude was selling at $9.50 a barrel when the law became effective 26 years ago, and is now trading above $60 in London.
“Taking into consideration the government’s need to attract investments, no possibility can be out-ruled,” Malami told Bloomberg, adding, “The possibility of settlement is not out of sight.”