Nigeria orders international major oil firms to pay $20 billion in back taxes

Google+ Pinterest LinkedIn Tumblr +

The Nigeria government said it has demanded that foreign oil companies pay nearly $20 billion in taxes, which it said was owed to local states.

A letter sent through the debt collection arm of the government, the Nigerian National Petroleum Corp (NNPC) to the oil companies cited what it called outstanding royalties and taxes for oil and gas production.

Industry and government sources revealed that Royal Dutch Shell, Chevron, Exxon Mobil, Eni, Total and Equinor were each asked to pay the central government between $2.5 billion and $5 billion. Norway’s Equinor, which produced around 45,000 barrels per day (bpd) of oil in Nigeria in 2017, confirmed the request.

A spokesperson from Equinor said “several operators have received similar claims in a case between the authorities in Nigeria and local authorities in parts of the country”. In the case of Exxon, a spokesperson for the U.S. oil and gas firm said the company “is currently reviewing the matter”.

The other companies involved- Shell, Total, Eni and Chevron, as well as Nigeria’s presidency, petroleum ministry and NNPC declined to comment.

The charge came after the central Nigerian government and local states settled a dispute over the distribution of revenue from hydrocarbon production. However, three company and government sources said that in 2018, all sides agreed that the Federal Capital Territory would pay the states several billion dollars.

Equinor Spokesperson said “Equinor sees no merit to the case”, while a source at another company said “this looks like an internal dispute between the federal and local governments. The central government is simply trying to shift to the IOCs [international oil companies]money it owes”.

Nigeria uses several types of contracts with energy companies- including the establishment of joint ventures and production sharing- the two most common partnerships for international oil companies in the country. The companies pay the government in the form of royalties and tax as well as providing the state with oil and gas.

The tax demand adds a fresh challenge to energy companies investing in Nigeria, Africa’s biggest oil and gas producer, which have been negotiating production-sharing agreements with the government to develop and operate giant offshore fields. Oil theft, huge oil spills and corruption further complicate operations in the country.


Leave A Reply