Page 7 - AfrOil Week 36 2019

AfrOil POLICY AfrOil
 Demand has shifted because of the steep price hikes that the Zimbabwe Energy Regulatory Authority (ZERA) has enacted in response to fuel shortages.
ZERA began to push prices upwards in Jan- uary, several months after Zimbabwe started experiencing fuel shortages because its foreign currency reserves were shrinking, and has done so a total of 13 times so far this year.
According to Ncube, the rate hikes have helped to balance supply and demand. “The queues [at filling stations] are shorter, maybe
because the prices of fuel have gone up,” he told The Standard. At the same time, though, sup- plies are adequate, he declared.
He also stated that Petrotrade had been financing its fuel imports with foreign currency obtained on the interbank market and from the Reserve Bank of Zimbabwe (RBZ). “We are sourcing foreign currency through the inter- bank market, although the foreign currency allocation for fuel is a bit lower,” he commented. “We are also being assisted by the RBZ in sourc- ing foreign currency, specifically for fuel.™
POLICY
US court rejects efforts by ExxonMobil, Shell to collect compensation from Nigeria
EXXONMOBIL (US) and Royal Dutch Shell (UK-Netherlands) have suffered a setback in their attempt to enforce an arbitration court’s ruling against Nigerian National Petroleum Corp. (NNPC).
Last week, a judge in the US federal court system rejected the two oil companies’ petition to revive the case, which hinges on allegations that Nigeria’s national oil company (NOC) extracted more crude oil than it should have from Erha, an offshore field.
Affiliates of Shell and ExxonMobil had filed suit in the US District Court in Manhattan in a bid to force NNPC to pay the sum of $1.8bn awarded by an arbitration court in October 2011. They said they were pursuing this course because Nigerian judicial authorities had unlawfully set aside that ruling several years before. Additionally, they claimed accrued interest had pushed the sum due up to $2.67bn.
Judge William Pauley rejected these argu- ments, writing in his 50-page ruling that the two super-majors were asking the US federal court system for too much. “While this court may have inherent authority to fashion appro- priate relief in certain circumstances, exercising that authority to create a $1.8bn judgment is a bridge too far,” he declared.
He also raised questions about whether Exx- onMobil and Shell should be targeting NNPC. He stated in his ruling that the NOC had been acting in this instance not on its own behalf, but as a representative of the Nigerian government.
Pauley went on to say that Exxon and Shell ought to seek relief in Nigeria, where they are pursuing several appeals. The petitioners “executed a contract in Nigeria with another Nigerian corporation containing an arbitra- tion clause requiring any arbitration to be held in Nigeria under Nigerian law, and [they] then sought to confirm the award in Nigeria,” he noted. “[They] cannot now reasonably complain that [their] efforts to collect will be
frustrated in Nigeria.”
NNPC hailed the court’s decision. Cecilia
Moss, the Nigerian company’s attorney, told Reuters in an interview that NNPC had always maintained that the US government had no basis for trying to enforce the arbitration award.
ExxonMobil took a more critical stance. Todd Spitler, a spokesman for the firm, said his company did not concur with the ruling and would consider its options. Shell, for its part, had not commented publicly on the matter as of press time.
The case stems from a dispute over the terms of an agreement signed in 1993 on joint devel- opment work at Erha, which lies 60km from the Nigerian coast. The offshore field came on stream in 2006, and the Nigerian government ordered NNPC to lift extra oil – in other words more than the share to which it was contractu- ally entitled – in 2008. Abuja justified this move by arguing that it was owed compensation for $646mn in operational losses, but ExxonMobil and Shell say that the Nigerian company began appropriating the extra barrels in late 2007.™
Pacific Asia Petroleum
Week 36 10•September•2019 w w w . N E W S B A S E . c o m
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