Royal Dutch Shell said claims that it owes billions in taxes could delay the development of a major oil field off the coast of the West African nation.
The federal government had ordered several major foreign oil and gas companies to pay nearly $20 billion in taxes it says are owed to local states, industry and government.
In a letter sent to the companies earlier this year by the Nigerian National Petroleum Corporation (NNPC) the unremitted taxes include outstanding royalties and taxes for oil and gas production.
The affected companies are Royal Dutch Shell, Chevron, Exxon Mobil, Eni, Total and Equinor were each asked to pay the Federal government between $2.5 billion and $5 billion.
Shell, the largest investor in the West African nation, would likely dispute the charges, Shell’s head of upstream Andy Brown told Reuters on the sidelines of the International Petroleum Week conference.
“It is something that has gone through the courts in Nigeria which relates to an original clause within the original PSCs (production sharing contracts),” he said in an interview. We will have to take it seriously but we think it has no merits,” said Brown, who steps down from his role this year.
“The outstanding tax issue will delay the final investment decision (FID) on developing Shell’s Bonga Southwest deepwater oil field, one of Nigeria’s largest with production expected to reach 180,000 barrels per day’’, Brown said.
“We’ll need to resolve that before we ever FID the Bonga Southwest project,” he added.
Shell has made progress with the government on some basic terms for operating the field but a decision on its development was now unlikely to be made in 2019. “Bonga Shouthwest’s FID may slip into next year.” Brown said
Just last week, the Federal High Court in Lagos has fixed April 20, 2019 for judgment in the suit filed by the Federal Government to recover a sum of $110 million from Nigeria Agip Oil Company Limited (NAOC).
Justice Mojisola Olatoregun fixed the judgment date after the parties adopted their final written addresses.
In the suit, the Federal Government accused Nigeria Agip Oil Company Limited of under-declaring the volume of crude oil it shipped out of the country between January 2011 and December 2014.
The federal government had alleged that the oil giant short-changed it to the tune of $55 million.
The government is praying the court to compel the oil firm to pay the $55million with an annual interest of 21 per cent.
It also wants the court to award another $55 million against Agip as exemplary damages.
The legal battle has been on since late 2016.
There are similar lawsuits pending against Total E&P Nigeria Plc and Chevron Nigeria Limited by the Federal Government.
In the case of Total, FG sought to recover $245,258,640, “being the total value of the missing revenues from the shortfall under-declared/undeclared crude oil shipments of the Federal Government of Nigeria.”
The Federal Government sought another $245,258,640 as general damages.