$60bn Claim Against IOCs Hard To Succeed – NNPC

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NNPC Towers

$60bn Claim Against IOCs Hard To Succeed – NNPC

The claim that international oil companies operating in Nigeria owe the Federal Government over $60bn with respect to Production Sharing Contracts is hard to succeed, a top executive at the Nigerian National Petroleum Corporation, has said.

The Chief Operating Officer, Upstream, NNPC, Mr Roland Ewubare, in an interview published in NNPC News, stated this when asked if it was possible to recover the $60bn said to have been lost to the delay in the review of the PSC law after the price of oil rose above the $20 stipulated by the law.

In November, President Muhammadu Buhari signed the bill that amended the Deep Offshore (and Inland Basin Production Sharing Contract) Act after its passage by the National Assembly.

The Attorney General of the Federation, Malami Abubakar, had repeatedly asked the IOCs to pay $62bn (over N20tn) owed to the Federal Government with respect to the PSCs.

Ewubare said the NNPC had in the past tested the proposition around the possibility of getting the money from the IOCs.

He said the corporation sought legal advice and got legal opinions in writing from legal experts.

He said, “The crux of those opinions is that we slept on our right – we had the right to ask and we didn’t ask and so it is gone.

“The second position was that what we really lost was not quantifiable dollars and cents or naira and kobo but an opportunity to make that money and that it is hard to make a legal claim that will succeed on the basis of an opportunity that was lost.”

According to Ewubare, the other aspect is that at some point in the course of engagement, there was an argument around the PSCs and the NNPC took certain steps that it believed, based on its interpretation of the law, were justified.

He said, “Those steps resulted in a dispute which went to arbitration because the argument of the other party was that NNPC has gone ahead to try to correct the anomaly through self-help by taking more barrels of oil than it was entitled to.

“At the arbitration, NNPC has won against Esso Exploration and Production Nigeria Limited and they are going on appeal. So, clawing back that money is not quite a straight-forward affair.”

The nation’s oil and gas production structure is majorly split between joint ventures onshore and in shallow water with foreign and local companies and the PSCs in deepwater offshore, to which most of the IOCs have shifted their focus in recent years.

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