Home Business News FG suit may lead to delay in Shell's Bonga project

FG suit may lead to delay in Shell’s Bonga project

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Oil giant Royal Dutch Shell, on Tuesday, said a directive by the Nigerian government to foreign oil companies to pay $20 billion in taxes owed will delay the final investment decision (FID) on its Bonga Southwest deepwater oilfield.

Specifically, 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. The charge came after the Federal Government and states settled a dispute over the distribution of revenue from hydrocarbon production.

Shell would likely dispute the charges, Shell’s Head of Upstream, Andy Brown, disclosed on Tuesday on the sidelines of the International Petroleum Week Conference in London.

“It is something that has gone through the courts in Nigeria which relates to an original clause within the original PSCs (production sharing contracts). We will have to take it seriously but we think it has no merits. We’ll need to resolve that before we ever finalize the investment decision on the Bonga Southwest project. Bonga Shouthwest’s FID may slip into next year.”

Norway’s Equinor, which produced around 45,000 barrels per day (bpd) of oil in Nigeria in 2017, confirmed the request.

“Several operators have received similar claims in a case between the authorities in Nigeria and local authorities in parts of the country,”

Shell, Total, Eni and Chevron declined to comment, as did the Presidency, petroleum ministry and NNPC.

About the Shell Bonga Project

The Bonga Southwest deepwater oilfield is one of the largest in Nigeria with an expected production of 180,000 barrels per day.Its bidding started this month.

It is the first deepwater project for the Shell Nigeria Exploration and Production Company (SNEPCO) and fro Nigeria. The discovery well is located in oil prospecting license (OPL) 212, which was awarded during Nigeria’s first round of deepwater frontier acreage awards in 1993.

 

 

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