Exxon Mobil Corp. ended months of negotiations with Nigeria by renewing three oil leases for fields the company operates in the country, an Exxon spokesman said.
The three leases — for sites that produce more than 550,000 barrels a day — were extended for another 20 years with an option to renew, at a signing ceremony Friday in the capital, Abuja.
Neither Exxon nor the Nigerian government provided details about the price paid for renewing the leases.
A person close to the deal said the government had asked for about $4 billion for the leases, but that Exxon paid less than $1 billion.
“Mobil Producing Nigeria, operator of its joint venture with the Nigerian National Petroleum Corporation, is pleased to confirm that it has reached agreement with the federal government of Nigeria on the long term renewal of the NNPC-MPN joint venture leases,” an Exxon Mobil spokesman said in a statement.
Nigerian officials didn’t respond to requests to comment.
Western oil companies work through joint ventures and production-sharing agreements with Nigerian National Petroleum Corp. A number of companies have oil leases expiring this year.
Pending legislation would change the scope of the joint ventures by increasing tax and royalty rates on Western firms. That makes it crucial for oil companies to renew expiring leases before the bill — currently before Nigeria’s House of Representatives — passes. For months, executives have been negotiating with officials from the Ministry of Petroleum.
Chevron Corp. and Royal Dutch Shell PLC also have several leases expiring this month.
“We’re in contact with the Nigerian government about license issues. We’re seeking clarity on this matter,” a Chevron official said.
A Shell spokeswoman said, “We expect that the formalization of the renewal of these licenses can be accommodated through continued dialogue with the federal government.”
The Nigerian government had previously stated that it wanted large Western oil companies operating in the country to invest in Nigeria’s underutilized downstream sector, such as refineries, in order to get leases renewed. Thus far, Nigerian officials haven’t received any guarantees along those lines, according to a person close to the Exxon negotiating team.
“The government wanted a couple of things, but we didn’t give in,” the person said. “We’re committed to the country. We’ve been here for close to half a century. We have things we’re doing long-term, adding value to the country. That’s what we brought to the table.”
Nigeria imports more than 90% of its petroleum products despite being Africa’s top oil producer. Its four refineries operate at less than 10% capacity and sometimes not at all.
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