Report: ExxonMobil, Shell to enforce part of $1.8bn award against NNPC

A United States appeals court says Exxon Mobil Corporation and Shell Plc affiliates may enforce a part of the $1.8 billion arbitration award against Nigerian National Petroleum Company Limited (NNPC), according to a Reuters report.

The development comes on the heels of a dispute concerning oil extraction near Nigeria’s coastline.

The affiliates are Esso Exploration and Production Company Nigeria Limited and Shell Nigeria Exploration and Production Company Limited.

The dispute arose from a 1993 contract for Esso Exploration and Production Nigeria Ltd and Shell Nigeria Exploration and Production Company to invest billions of dollars to develop the Erha oil field in the Gulf of Guinea, and share profits with NNPC.

Extraction began in 2006. However, disagreements soon arose and Exxon and Shell said that by late 2007, NNPC was at the government’s instruction “lifting” more oil than the contract allowed, depriving them of billions of dollars.

Following the arbitration ruling, Exxon and Shell sought to enforce their award in Manhattan while NNPC sought to set it aside in Nigeria.

In a new development on Friday, the 2nd US circuit court of appeals in Manhattan said a lower court judge erred in rejecting the entire October 2011 award, which by 2018 had grown to $2.67 billion including interest, against the NNPC.

It said the judge should have determined which parts of the award had been deemed enforceable by a Nigerian appeals court.

Lawyers for the companies did not immediately respond to requests for comment.

Susan Carney, circuit judge for the US court of appeals, said ExxonMobil and Shell did not prove that setting aside part of the award violated public policy, and said US courts should not second-guess Nigerian courts’ substantive views on Nigerian law.

But she said the Nigerian judgments were “ambiguous” as to how much of the award was set aside, and more fact-finding was needed.

The decision partially reversed a September 2019 ruling by William Pauley, US district judge, in Manhattan. Pauley died last July, and another judge will take over the case, the Reuters report added.

The case is marked Esso Exploration and Production Nigeria Ltd et al v Nigerian National Petroleum Corp, 2nd U.S. Circuit Court of Appeals, Nos. 19-3159, 19-3361.