Economy
$2.7bn Debt: NNPC Wins Judgement Against ESSO, Shell
By Adedapo Adesanya
The Nigerian National Petroleum Corporation (NNPC) was on the triumphant side of the verdict delivered by the United States Southern District Court of New York in a judgement between the corporation and ESSO Exploration and Production Nigeria Limited and Shell Nigerian Exploration and Production Company Limited (collectively ESSO).
This was disclosed in a statement issued by Mr Ndu Ughamadu, the spokesman for the corporation on Sunday in Abuja.
It will be recalled that a court hearing was held on February 1, in the protracted litigation arising from the dispute between NNPC and ESSO regarding the implementation of the production sharing contract dated May 21, 1993 covering OPL 209/OML 133.
ESSO referred its claims to arbitration in Nigeria and obtained an arbitral award of $1.799 billion on October 24, 2011, with annual interest running at LIBOR plus four percent.
Unsatisfied with the ruling, the NNPC challenged the award at the Federal High Court, Abuja, which in May 2012, ordered that the arbitral award be set aside.
Notwithstanding the decision of the Nigerian court, ESSO applied to the United States District Court, Southern District of New York for recognition and enforcement of the arbitral award.
NNPC challenged ESSO’s application on the ground that there was no award, which the US court could enforce as a competent court in Nigeria had since set aside the award.
The corporation also contended that there was no legal basis for the US court to exercise jurisdiction over it as it had no presence in the United States, owned no property and does not conduct its businesses therein.
ESSO argued that the NNPC was the alter ego of the Federal Government of Nigeria, owned assets in the USA including bank accounts and also conducts businesses in the USA.
It thereafter, obtained the leave of court to conduct jurisdictional discovery to ascertain if the US court could assert personal jurisdiction over NNPC.
At the close of the discovery procedure, the court ordered NNPC and ESSO to appear for oral hearing, which was held before Judge W. H. Pauley on February 1, for parties to canvass their respective positions.
On September 4, the US court delivered its judgment by which it upheld the corporation’s application to dismiss ESSO’s enforcement application on the ground that a competent Nigerian court had set aside the underlying award.
It also directed the clerk of the court to terminate and discontinue all motions and processes filed by ESSO in the matter.
“By this development, NNPC has successfully secured the dismissal of ESSO’s application to secure recognition and enforcement of its arbitral award valued in excess of $2,699,405,616 plus interest.
“The effect is that ESSO, who had sought the order of the US court to enforce the said award, has lost the right. While ESSO is at liberty to appeal this decision, NNPC is optimistic that its case on appeal is very strong.
“This is a significant decision in the history of this case as the US court has not only discharged NNPC from any indebtedness to ESSO, but also set the stage for NNPC’s pursuit of the challenge of three other outstanding enforcement applications filed in the US court by other production sharing contract contractors,” Mr Ugahmadu said.
He also said that the decision of the US court would lend weight to the effort of NNPC and the production sharing contract contractors to explore amicable resolution of other underlying disputes.
The statement noted that NNPC was represented by the US law firm of Messrs. Chaffetz Lindsey and Nigerian law firm of Messrs. Streamsowers and Kohn.
By Adedapo Adesanya
Foreign Exchange (FX) demand pressure eased on the Naira on Wednesday, April 8, in the Nigerian Autonomous Foreign Exchange Market (NAFEX) after gaining N14.84 or 1.07 per cent against the greenback to quote at N1,371.82/$1 compared with the previous day’s N1,386.66/$1.
Also, the local currency appreciated against the Euro in the same market window at midweek by N1.54 to close at N1,604.07/€1 versus Tuesday’s closing rate of N1,605.61/€1, but lost N6.26 against the Pound Sterling to trade at N1,844.83/£1 versus N1,838.57/£1.
In the parallel market, the exchange rate of the Naira to the US Dollar remained unchanged yesterday at N1,410/$1, according to data sourced by Business Post.
There were indicators that the official FX market experienced a liquidity surge, which eased worries around the dominant US Dollar on Wednesday, as the Central Bank of Nigeria (CBN) revealed interbank deals rose to 220 from 71 reported the previous day.
The domestic currency has been in strong demand from foreign portfolio investors seeking to purchase OMO bills and other fixed-income instruments.
Forecasts also show that the local currency will remain relatively stable during the second quarter of the year, trading within the N1,340 to N1,430 per Dollar band on improved FX liquidity, stronger oil earnings, and rising external reserves, which have climbed above 50 billion dollars.
As for the cryptocurrency market, it fell after an initial ceasefire-fueled rally, with markets retracing Wednesday’s “ceasefire euphoria” as cracks emerge in the US-Iran truce while the Strait of Hormuz remains effectively closed.
Global risk assets face renewed pressure as geopolitical uncertainty combines with what analysts call “uncoordinated tightening” by major central banks, reinforcing higher-for-longer interest-rate expectations.
The price of Cardano (ADA) fell by 4.7 per cent to $0.2500, Ripple (XRP) slumped 3.7 per cent to $1.33, Dogecoin (DOGE) shrank by 3.5 per cent to $0.0915, Binance Coin (BNB) slipped 2.6 per cent to $600.02, Ethereum (ETH) went down by 2.5 per cent to $2,183.82, Solana (SOL) dipped 2.5 per cent to $82.24, and Bitcoin (BTC) depreciated by 1.1 per cent to $70,995.20.
However, TRON (TRX) appreciated by 0.4 per cent to $0.3173, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited rallied by 0.28 per cent on Wednesday despite weak investor sentiment, as the bourse ended with 18 price gainers and 38 price losers, implying a negative market breadth index.
The growth recorded yesterday by Customs Street was influenced by the 2.11 per cent rise posted by the energy index, and the 1.79 per cent jump achieved by the banking sector.
The other sectors experienced profit-taking, with the consumer goods losing 1.07 per cent, the insurance counter down by 0.36 per cent, and the industrial goods space down by 0.19 per cent.
Universal Insurance chalked up 10.00 per cent to sell for N1.21, Omatek improved by 9.78 per cent to N2.47, VFD Group expanded by 9.71 per cent to N11.30, CWG appreciated by 9.64 per cent to N21.05, and Livestock Feeds gained 9.56 per cent to close at N7.45.
On the flip side, UPDC REIT lost 10.00 per cent to settle at N6.75, Fortis Global Insurance shed 9.92 per cent to quote at N1.18, Deap Capital depreciated by 9.85 per cent to N5.40, Chams went down by 9.47 per cent to N3.06, and Japaul declined by 8.82 per cent to N3.10.
Yesterday, the All-Share Index (ASI) went up by 562.43 points to 202,585.53 points from 202,023.10 points, and the market capitalisation advanced by N389 billion to N130.404 trillion from N130.015 trillion.
During the session, 1.0 billion stocks worth N40.6 billion exchanged hands in 52,723 deals compared with the 1.1 billion stocks valued at N40.3 billion executed in 78,006 deals a day earlier, indicating an uptick in the trading value by 0.74 per cent, and a shortfall in the trading volume and number of deals by 9.09 per cent and 32.41 per cent apiece.
The activity chart was led by Access Holdings, which sold 233.0 million units valued at N6.1 billion, Fidelity Bank exchanged 113.1 million units worth N2.2 billion, Wema Bank recorded a turnover of 103.3 million units valued at N2.7 billion, Zenith Bank transacted 60.6 million units for N6.5 billion, and Chams traded 47.5 million units worth N154.6 million.
By Adedapo Adesanya
Crude oil plummeted on Wednesday on hopes of the reopening of the Strait of Hormuz after US President Donald Trump agreed to a two-week ceasefire with Iran.
Brent crude futures moderated to $94.75 a barrel, while the US West Texas Intermediate (WTI) crude eased to $94.41 a barrel.
President Trump said on Wednesday that the US will work closely with Iran and will be talking about tariff and sanctions relief with Iran.
However, analysts cautioned that the ceasefire is a temporary two-week reprieve rather than a permanent resolution, and the global energy system remains fragile due to structural damage to regional infrastructure.
Reuters reported that Iran could open the strait in a limited and controlled way on Thursday or Friday ahead of a meeting between U.S. and Iranian officials in Pakistan.
Agence France-Presse (AFP) reported that two ships appeared to have transited the Strait of Hormuz since the US-Iran ceasefire deal. A Greek-owned bulk carrier and a Liberia-flagged vessel both transited the waterway early on Wednesday.
Meanwhile, Israel carried out its heaviest strikes on Lebanon since the conflict with Hezbollah broke out last month, even as the Iran-aligned group paused attacks on northern Israel and Israeli troops in Lebanon under the ceasefire.
Also, Saudi Arabia’s East-West Pipeline, a critical artery bypassing the Strait of Hormuz, was reportedly hit in an Iranian drone attack. Prior to the attack, the pipeline was pumping at its emergency capacity of 7 million barrels per day to bypass the shuttered strait.
The strikes occurred just hours after a US-Iran ceasefire announcement, which has so far failed to halt regional hostilities. Other facilities in the kingdom were also targeted in the wave of strikes, which the Islamic Revolutionary Guard Corps (IRGC) claimed included oil facilities owned by American companies in Yanbu.
US crude stocks rose by 3.1 million barrels to 464.7 million barrels during the week ended April 3, the Energy Information Administration (EIA) said.
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