A District Judge in New York, United States, has decided against enforcing a $1.8bn 2011 arbitration against the Nigerian National Petroleum Corporation.
Nigeria is faced with a $9bn arbitration award, which accumulates $1m in interests daily, on a breached gas sales purchasing agreement with a controversial British Virgin Island registered company, Process and Industrial Development.
William Pauley of the district court, said enforcing the October 2011 ruling will be ‘a bridge too far,’ Reuters reports.
“While this court may have inherent authority to fashion appropriate relief in certain circumstances, exercising that authority to create a $1.8bn judgment is a bridge too far,” the judge said.
The award, which was set aside by courts in Nigeria, has risen to $2.67bn in interests.
Court papers revealed that Exxon and Shell affiliates in Nigeria signed a contract with NNPC in 1993 to explore for oil in the Erha field, 97km off the Nigerian coast.
Under the agreement, ESSO and SNEPCO were to invest in the exploration and share the profit with the NNPC, in a deal which is similar to a production sharing contract.
The subsidiaries of the oil multinationals accused NNPC of lifting more oil than was agreed in the terms, depriving them of billions of dollars worth of investment.