Official: Oil Majors Owe Nigeria $4 Billion

Big Oil majors operating in Nigeria owe the state $4 billion, a government official has said, as quoted by Reuters.

"International oil companies are expected to pay 3% of their annual budget to NDDC [the Niger Delta Development Commission] as their major income but they have been defaulting for a long period of time," Tayo Alasoadura told media. "Efforts are being made to get the outstanding payments, which is up to $4 billion from them. All of them are owing," the official added.

Foreign oil companies operating in Nigeria include Exxon, Shell, TotalEnergies, and Italy's Eni. Earlier this year, the government inked a massive deal with the four supermajors to develop the Bonga deepwater field, which could bring in $10 billion in fresh investments into the country and 150,000 additional barrels to daily production.

Yet relations between supermajors and the Nigerian authorities have not always been smooth, with the bone of contention most often being the Niger Delta, where the country's oil production is concentrated.

Just this month, Anglo-Dutch Shell settled a legal dispute running since 1991 regarding an oil spill from a pipeline that occurred in 1970. The supermajor agreed to pay $111 million to a Delta community to settle the case. The company is currently in the process of finding a buyer for its onshore and shallow-water assets in the West African country.

This is not the only lawsuit against a Big Oil major in Nigeria. Earlier this year, a local company took Shell to court, demanding $4 billion for the poor condition of the Nembe Creek Trunk Line that the Nigerian company bought in 2015 and for Shell's alleged underreporting of oil exported from the Bonny Terminal.

This latest demand on Big Oil may sour sentiment in the industry towards Africa's biggest oil producer at a time when most oil majors think twice before making a financial commitment to new production.

By Charles Kennedy for Oilprice.com

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