Home / Energy / Chevron, Statoil in US Court with NNPC over $1bn excess receipts on Agbami OML 128
Chevron NNPC

Chevron, Statoil in US Court with NNPC over $1bn excess receipts on Agbami OML 128

Two strategic international oil companies (IOCs) operating in Nigeria, Chevron and Statoil, have dragged the federal government via the Nigerian National Petroleum Corporation (NNPC) to a United States of America’s court over claims of overpayments on OML 128, Agbami field.

The prayers of the duo include that NNPC should pay back $1 billion in alleged overpayments on OML 128 where Agbami field is located.

The US suit is in reaction to an earlier appeal to the Federal High Court in Lagos which issued a counter-ruling in May 2015 stating that Statoil had to pay $1.1 billion to NNPC.

Africa Energy Intelligence had reported that the appeal followed initial arbitral held in Nigeria that asked NNPC to pay nearly $1 billion to the majors to cover the excess amount it had earned when redistributing revenue from OML 128, which encloses the giant Agbami field (240,000 bpd).

The report further noted that Statoil and Chevron didn’t accept the verdict and proceeded to take the battle to the New York court where they are now claiming for NNPC to promptly pay the same amount as the March 2015 sentence, namely $1 billion.

Business Hilights gathered that the IOCs are represented by the law firm, Freshfields Bruckhaus Deringer, but also have the support of Nigerian lawyers, Babatunde Fagbohunlu, a partner at Aluko & Oyebode currently defending Chinese group, China National Offshore Oil Corporation (CNOOC) against Abuja, and Olasupo Shashore, former public prosecutor in Lagos.

An issue of note is that in 2012, a Federal High Court in Abuja had voided two separate arbitration awards worth $5.25 billion (about N840 billion) against the NNPC in favour of some oil exploration companies in the country.

In the first case, the court voided the arbitration award of $3.45 billion and $1.8 billion award in the second suit.

Trial judge, Justice Adamu Bello, in the two judgments that lasted over three hours, held that the subject matter of the arbitration, the interpretation, application and administration of the Petroleum Profit Tax Act and the Deep Offshore Act, Education Tax Act and Company Income Tax Act were functions solely to be carried out by Federal Inland Revenue Service (FIRS), and not the oil companies as they had done and had wanted to continue doing.

Already, FIRS had filed the action to impeach the arbitral proceedings initiated against NNPC by oil majors in the country outside the country, on the grounds that the tax issues raised in the arbitration proceedings were not resolvable by arbitration.

Another issue of note is the fact that Shell, Esso, Nigerian Agip, Total Exploration had, following a dispute over production sharing contract entered into on April 19, 1993, over Oil Mining Lease (OML) 118, in Bonga oil field, dragged NNPC before an arbitration panel which sat in South Africa and another European country and awarded costs against Nigeria.

Besides, before the arbitration panels entered their judgments, FIRS was in court contending that the issues raised by the oil companies in the arbitration panels concerned taxation, which reference had been made to the arbitration and was not one which was allowed by law to be settled by arbitration.

About Business Hilights

Business Hilights is an online news channel conceptualized and structured to report and track on a daily basis; latest developments in critical business sectors to serve as a one stop news gateway for governments, foreign and indigenous investors.
x

Check Also

Discretionary allocations of oil licences killing industry on alter of politics—Ezekwesili

Vociferous former Minister of Solid Minerals, ...