Continental Focus, International Reach

Nigerian Tax Bill Could Delay Bonga Southwest FID

Thursday, February 28, 2019

Royal Dutch Shell said Nigeria’s claims that it was owed billions in taxes could delay the development of a major oil field off the coast of the West African nation. Nigeria ordered several major foreign oil and gas companies to pay nearly $20 billion in taxes it says are owed to local states, industry and government, sources told Reuters.

Shell, the largest investor in the West African nation, would likely dispute the charges, Shell’s head of upstream Andy Brown said in an interview with Reuters on the sidelines of the International Petroleum Week conference.

“It is something that has gone through the courts in Nigeria which relates to an original clause within the original PSCs (production sharing contracts),” he said. “We will have to take it seriously, but we think it has no merits.”

The tax issue could delay the FID on the development of the Bonga Southwest oil field located offshore Nigeria in its deep waters. “We’ll need to resolve that before we ever FID the Bonga Southwest project,” he said.

According to the Reuters article, Shell made progress with the government on some basic terms for operating the field but a decision on its development was now unlikely to be made in 2019. “Bonga Southwest’s FID may slip into next year.” Brown said.