William Clowes 6/23/2022
(Bloomberg) — Nigeria’s Senate will investigate Shell Plc’s historic license renewals in the West African state to determine whether they were extended unlawfully and cost the government up to $200 million.
Senate President Ahmad Lawan formed a committee on Wednesday to probe the oil major’s permits that expired in 1989 and 2019, according to a statement emailed by his spokesman. The decision followed a motion submitted by Senator George Sekibo who said the duration of the licenses should have been 20 years rather than 30 years under Nigerian law.
A spokesman for Shell didn’t immediately respond to a request for comment.
The first extra decade of oil rights to 1989 caused the Nigerian government to lose $120 million in fees, taxes and royalties, while the second to 2019 cost another $80 million, according to Sekibo’s motion. The committee may urge the country’s anti-graft agency, the Economic and Financial Crimes Commission, to compel a joint venture headed by Shell to refund $200 million to the state “or any amount short of what was paid under the said lease agreements,” it said.
Shell operates an onshore and shallow water joint venture in Nigeria with TotalEnergies SE, Eni SpA and the state-owned energy company that obtained its production rights in the late 1950s and early 1960s. While the international partners have been selling oil block permits to local firms for more than a decade, Shell is currently discussing the divestment of the entirety of its 30% stake in the remaining 19 licenses.
Permits awarded to other joint ventures operated by TotalEnergies, Eni, Chevron Corp. and ExxonMobil Corp. may also have been “non-compliant,” the motion said. The companies didn’t immediately respond to requests for comment.
