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Shell Says Nigerian Oil Charges May Erode Investor Confidence




Shell Says Nigerian Oil Charges May Erode Investor Confidence 

By Julie Ziegler

May 27 (Bloomberg) — Royal Dutch Shell Plc‘s Nigeria venture said proposed changes by the government to retroactively amend production agreements may deter investment in the nation.

Nigerian President Umaru Yar’Adua on May 20 announced his government plans to recover $1.9 billion from Shell and Exxon Mobil Corp. in revenue and taxes from deepwater projects. Under production contracts, the companies were excluded from sharing revenue until after the full cost of investment was recovered.

“We would like to reinforce that following recent statements relating to retroactive changes to fiscal terms, we are very concerned about the future potential implications for investor confidence in Nigeria,” Shell’s Nigeria venture said in a statement to Bloomberg, adding that it has yet to be officially informed of the president’s plan.

Nigeria’s government announced a plan last year to seek more favorable terms on deepwater production contracts, many of which were signed during the 1990s when oil prices were below $20 a barrel. Unlike onshore agreements, oil companies didn’t have to create joint venture firms with the government.

“We operate our business in full compliance with the laws and regulations of the country,” Shell said in a statement.

Levi Ajuonuma, a spokesman for state-owned Nigerian National Petroleum Corp., said Shell has recovered its investment costs on its Bonga deepwater field, which began producing in 2005, and should now share revenue with the government.

“Retroactive or no retroactive, a debt is a debt,” Ajuonuma said in a telephone interview from Abuja yesterday. “They should just pay up and shut up.”

Ajuonuma said earlier that Shell agreed to loan NNPC $3.1 billion to fund a financing shortfall for their joint venture projects and to pay outstanding balances from 2006 and 2007. Shell confirmed an agreement was reached, adding that another signing of more “detailed agreements” must occur before the loans can be executed.

To contact the reporter on this story: Julie Ziegler in Lagos at[email protected]

Last Updated: May 26, 2008 19:14 EDT and its also non-profit sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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