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The Nigerian National Corporation Petroleum Corporation has agreed a $5 billion deal with five oil majors to resolve a long-running dispute over joint-venture costs, according to a report by the Financial Times on Tuesday. The NNPC signed the settlement deal with the oil majors – Total, Eni, Chevron, Royal Dutch Shell, and ExxonMobil – to cover joint-venture costs incurred between 2010 and 2015.

Under the NNPC’s oil and gas joint-venture partnerships with oil majors, exploration and production costs are supposed to be shared among all partners. But oil majors have persistently accused NNPC of failing to fulfil its obligations, known as “cash calls”. According to the oil companies, the total amount of cash calls owed them by the national oil company is over $6 billion.

However, Emmanuel Ibe Kachikwu, the Minister of State for Petroleum Resources, told the FT that the five oil majors have now accepted the settlement deal.

Under the terms of the deal, the minister said the NNPC will pay the $5 billion settlement in the form of barrels of new crude production over five years. The NNPC will also make a one-off cash payment to oil majors to cover $1 billion in costs incurred this year in the joint ventures, he said.  

People close to the NNPC and the oil majors have told the FT that both sides have agreed in principle to new financing arrangements, starting next year, where costs can be recovered and taxes paid from an escrow account set up for each joint venture.

The settlement deal will require the approval of President Muhammadu Buhari and two other government agencies, the FT said.