New standoff between the Nigerian state and the oil majors

62 billion dollars: it is the exorbitant amount demanded by Nigeria of the oil majors operating on its territory, who decided to counter-attack in court. A titanic fight that the government is not sure of winning.

According to information obtained by AFP, five cases are pending before the Federal High Court of Justice in Nigeria, to challenge the government's request, which claims to want a better sharing of oil revenues in the main producer of crude oil on the African continent.

Nigerian Justice Minister Abubakar Malami confirmed a few days ago the controversial amount: "We are asking the oil companies $ 62 billion," he told AFP, without expanding further.

The case goes back to a legal dispute settled a year ago: three Southeast states (Akwa-Ibom, Bayelsa and Rivers), where the main reserves of black gold are exploited, want to force the federal government to revise agreements with international companies in favor of Nigeria.

At stake, a series of "production sharing contracts" concluded in 1993 during the allocation of fields in deep offshore. The law passed the same year provided that the government's share – calculated at that time on the basis of a $ 20 barrel – should be re-evaluated in the event of a rise in oil prices.

The judgment of the Supreme Court of Nigeria of 17 October 2018 gives reason to the three complaining States and orders the authorities "to set up immediately an organ and the mechanism necessary to recover all losses of income" suffered by the State.

This decision will then serve as a legal basis for the Ministry of Justice, responsible for recovering funds, which sends "collectors" to the operators concerned.

In response, the latter launched judicial proceedings awaiting trial in Lagos and Abuja against the government, according to judicial sources. They are Equinor (Norway), Esso (a subsidiary of the US Exxon Mobil), CNOOC (China National Offshore Oil Corporation, China) and Shell Nigeria (Anglo-Dutch).

– 'Unfounded' –

"These requests are unfounded," said AFP representative of a major oil involved in the case. "We have no idea how the government could calculate such an amount, it did not disclose it to us".

"Moreover, we (the operators, editor's note) were not parties in the case that led to the Supreme Court's decision in the dispute between the Delta States and the government, so we are not bound by to its decision, "adds the same source on condition of anonymity.

When the law governing production sharing contracts came into force 26 years ago, major foreign oil companies have agreed to pay back about 20% of profits from deep offshore exploitation.

In Nigeria, most of the crude is mined by 5 majors – Shell, French Total, Chevron and Exxon Mobil, Italian Eni – which operate in partnership with the national oil company (NNPC) or other players oil.

This is not the first time the state has attacked foreign companies in the private sector. The South African telecom operator MTN paid for it last year, when it was asked for the return of $ 8 billion, illegally taken out of the country according to Abuja.

Nigeria, which has just proposed a historic budget – nearly $ 34 billion – for 2020, may seek to bail out in a difficult economic context, weighed down by the fall in oil prices and stagnant production (1.86 million dollars). barrels per day).

But it is unlikely to manage to collect the amounts required, say the experts interviewed by AFP.

"The government is too dependent on the oil companies to win this kind of fight," says a consultant specializing in the oil sector based in London. "He does not have the legal, political or economic power to force tankers to pay him billions retroactively."

In the meantime, the government has initiated discussions with the oil companies involved in order to settle the cases in court.

"Negotiations have started at the highest level, Nigeria needs these operators, so it's not a question of getting out of hand," AFP quoted a senior source in the national company NNPC. "We have to wait patiently to see what will come out of it."