The Federal Government ordered several major foreign oil and gas companies to pay nearly $20bn in taxes it said were owed to local states, Reuters quoted industry and government sources as saying.
Shell would likely dispute the charges, Shell’s Head of Upstream, Andy Brown, was quoted as saying 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 in an interview.
“We will have to take it seriously but we think it has no merits,” said Brown, who steps down from his role this year.
The outstanding tax issue will delay the final investment decision on developing Shell’s Bonga Southwest deepwater oil field, one of Nigeria’s largest with production expected to reach 180,000 barrels per day, Brown said.
“We’ll need to resolve that before taking FID on the Bonga Southwest project,” he said.
Shell has 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.
In the Gulf of Mexico, Brown said Shell planned to move swiftly to develop the Whale discovery, which it announced in January 2018. Shell holds a 60 per cent stake in the field and Chevron the remaining 40 per cent.
“We’re going to crack on with the development of this project,” he said, without giving a specific timeline for the development except to say it would be “fast”.
He said the field had the potential to be developed into a new production hub for Shell in the Gulf of Mexico.
Shell and many of its peers have been cutting costs sharply for developing large offshore fields to compete with cheaper sources of oil such as US shale.