Nigeria escapes another $1.8bn fine in oil deal in US
Nigeria has escaped another legal judgement against it after a US judge rejected Exxon Mobil Corp’s and Royal Dutch Shell Plc’s effort to revive a $1.8 billion arbitration award. Reuters reports that William Pauley who is a US district judge gave the judgement on Wednesday, September 4.
The case was brought against Nigeria over a 1993 contract dispute with the Nigerian National Petroleum Corporation over extraction of oil. The judge “cited public policy and due process considerations in deciding not to enforce the October 2011 award against the NNPC which was subsequently set aside by courts in Nigeria.” Pauley wrote in his decision that “while this court may have inherent authority to fashion appropriate relief in certain circumstances, exercising that authority to create a $1.8 billion judgment is a bridge too far.
The companies said that the award had grown to $2.67 billion, including interest. Exxon spokesman Todd Spitler said they disagreed with the judgement and now re-evaluating their next step.
Cecilia Moss who is the lawyer of the NNPC said: “NNPC is very pleased with the decision, and was always confident that there was no basis for a U.S. court to confirm the award.” According to court papers “the 1993 contract anticipated that Exxon and Shell affiliates would invest billions of dollars to extract oil from the Erha field, about 60 miles (97 km) off Nigeria’s coast, and share profits with NNPC.” It was however reported that more oil was extracted contrary to the contract.
The judge said Exxon and Shell “executed a contract in Nigeria with another Nigerian corporation containing an arbitration clause requiring any arbitration to be held in Nigeria under Nigerian law, and it then sought to confirm the award in Nigeria.
Meanwhile, former minister of defence Theophilus Yakubu Danjuma revealed that he committed $40 million for the take-off of the energy project which was a contract between the federal government and the Process and Industrial Development Ltd (P&ID).
In an interview with Businessweek Magazine, the former minister said the project was his original idea but that it was hijacked by co-founder of P&ID, Michael Quinn.
The Irish company was awarded $9.6 billion against Nigeria over the failed gas flaring project and Danjuma claimed one of his companies, Ita-Kuru Petrochemicals Ltd, provided the fund to prepare for it.
Omotayo Yusuf
legit.ng