By Michael Eboh with Agency Report

Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, yesterday, disclosed that the Federal Government has reached a $5 billion settlement agreement with five International Oil Companies, IOCs, over debts owed the companies between 2010 and 2015.

The deal will see Nigeria saving over $1 billion, as it is believed that the oil companies are being owed over $6 billion.

Though the Nigerian National Petroleum Corporation, NNPC, had repeatedly queried the amounts it owes the western companies, the settlement is an attempt to draw a line under the dispute.

In an interview with Financial Times, Kachikwu stated that the companies — Royal Dutch Shell,  ExxonMobil,  Eni,Chevron  and  Total  — would be paid the sum to cover outstanding joint exploration and production payments.

NNPC GMD, Dr. Emmanuel Ibe Kachikwu

According to Kachikwu, the $5 billion payments will be made in the form of barrels of new crude production over the next five years.

Furthermore, the report stated that the settlement also addressed the $1 billion debt the oil companies claimed was due from NNPC for costs incurred this year in the joint ventures.

The oil companies, the report said, were expected to receive a one-off cash payment from the Federal Government to cover this amount.

According to the report, the companies have already signed the deal, which is still subject to the approval of two regulatory agencies as well as President Muhammadu Buhari, while they also seek to forge new financing arrangements for their joint ventures in Nigeria.

“The settlement had been accepted by the five companies. It is hoped the deal can be finalised before the end of the year,” Kachikwu said.