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EXCLUSIVE-Nigeria hits oil majors with billions in back taxes

Thu, 21st Feb 2019 11:20

* Letters sent to Shell, Exxon, Chevron, Eni, Total, Equinor

* Companies asked to pay between $2.5 bln and $5 bln

* Nigeria's NNPC says debt due to outstanding tax payments

* Equinor sees no merit to tax claim - company spokesman

By Ron Bousso

LONDON, Feb 21 (Reuters) - Nigeria has ordered foreign oiland gas companies to pay nearly $20 billion in taxes it says areowed to local states, industry and government sources said, in amove that could deter investment in Africa's largest economy.

In a letter sent to the companies earlier this year via adebt-collection arm of the government, Nigerian NationalPetroleum Corp (NNPC) cited what it called outstanding royaltiesand taxes for oil and gas production.

Royal Dutch Shell, Chevron, Exxon Mobil, Eni, Total and Equinorwere each asked to pay the central government between $2.5billion and $5 billion, said the sources, who saw or werebriefed on the letters.

Norway's Equinor, which produced around 45,000 barrels perday (bpd) of oil in Nigeria in 2017, confirmed the request.

"Several operators have received similar claims in a casebetween the authorities in Nigeria and local authorities inparts of the country," an Equinor spokesman said.

Exxon "is currently reviewing the matter", a spokeswoman forthe U.S. company said.

Shell, Total, Eni and Chevron declined to comment, as didNigeria's presidency, petroleum ministry and NNPC.

'NO MERIT'

The charge came after the central Nigerian government andlocal states settled a dispute over the distribution of revenuefrom hydrocarbon production. The sides agreed last year thatAbuja would pay the states several billion dollars, threecompany and government sources said.

The companies were expected to dispute their respectivepayment claims.

"Equinor sees no merit to the case," the company spokesmansaid.

A source at another company said: "This looks like aninternal dispute between the federal and local governments. Thecentral government is simply trying to shift to the IOCs(international oil companies) money it owes."

It was unclear whether the move was linked to the upcomingpresidential election in Nigeria, the most populous Africancountry.

The tax demand adds a fresh challenge to energy companiesinvesting in Nigeria, Africa's biggest oil and gas producer,which have been negotiating production-sharing agreements withthe government to develop and operate giant offshore fields.

Oil theft, massive oil spills and corruption furthercomplicate operations in the country.

Nigeria, a member of the Organization of the PetroleumExporting Countries (OPEC), produced around 2.1 million bpd ofoil last year, compared with 1.86 million bpd in 2017, NNPCsays.

Nigeria uses several types of contract with energy companiesincluding the establishment of joint ventures and productionsharing, the two most common partnerships for international oilcompanies in the country.

The companies pay the government in the form of royaltiesand tax as well as providing the state with oil and gas.

(Additional reporting by Felix Onuah, Camillus Eboh and AlexisAkwagyiram in Abuja, Gwladys Fouche in Oslo, Jennifer Hiller inHouston, Bate Felix in Paris and Stephen Jewkes in Milan;Editing by Dale Hudson)

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