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Oil Majors Set To Receive $5.1 Billion From Nigeria In Unpaid Loans

Oil storage tanks

Royal Dutch Shell, Exxon Mobil and others will receive $5.1 billion from the Nigerian government for unpaid bills dating back to 2015, according to a new deal reported by Reuters.

The state-owned Nigerian National Petroleum Corporation (NNPC) owed a total of $6.8 billion as of December 2015 in “cash-calls,” but struggled to pay back the operational loans due to low oil prices and a domestic militancy that caused half of the West African country’s oil to go offline for large chunks of 2016.

The new deal allows the government to pay the reduced amount over five years, without interest. Instead of cash, the Western oil companies will get their payments in the form of oil cargoes, but only when Nigerian oil production exceeds 2.2 million barrels per day.

"If for any reason we did not meet (the) threshold we will not pay the $5.1 (billion), so that is fantastic," Nigerian Oil Minister Emmanuel Ibe Kackikwu said of the deal. Next, the deal will head to the National Economic Council, a governmental advisory group, for approval.

In addition to Shell and Exxon, Italy’s Eni, U.S.-based Chevron and France’s Total are also involved the deal. All five refused to comment upon Reuters’ request.

Over the course of 2016, the Nigerian oil sector has accumulated more than $2.5 billion in debt to finance existing projects, according to the petroleum ministry.

Lagos’ oil-related lawsuits don’t stop here.

In September, news broke that the Nigerian government is suing Chevron, Eni, Total, Shell, and Petrobras for illegally exporting crude oil worth $12.7 billion in the years between 2011 and 2014. Exxon may also join the list of defendants.

According to government officials quoted by the Associated Press, the five companies failed to declare 57 million barrels of crude exports for the period, bound for the U.S.—which was discovered through discrepancies between departure and arrival declaration figures, with some loads not declared upon departure at all – suggesting that the problem is related to the country’s rampant corruption.

By Zainab Calcuttawala for Oilprice.com

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