(Adds Exxon statement)
By Jonathan Stempel
NEW YORK, Sept 4 (Reuters) - A U.S. judge on Wednesday
rejected Exxon Mobil (NYSE:XOM) Corp's XOM.N and Royal Dutch Shell Plc's
RDSa.L effort to revive a $1.8 billion arbitration award
against Nigeria's state-run oil company, which stemmed from a
dispute over a 1993 contract to extract oil near the African
country's coastline.
U.S. District Judge William Pauley in Manhattan cited public
policy and due process considerations in deciding not to enforce
the October 2011 award against Nigerian National Petroleum Corp
(NNPC), which was subsequently set aside by courts in Nigeria.
"While this court may have inherent authority to fashion
appropriate relief in certain circumstances, exercising that
authority to create a $1.8 billion judgment is a bridge too
far," Pauley wrote in a 50-page decision.
The companies said last November that the award had grown to
$2.67 billion, including interest.
Exxon spokesman Todd Spitler said the Irving, Texas-based
company disagreed with the decision and was evaluating its next
steps. Shell and its lawyers did not immediately respond to
requests for comment.
"NNPC is very pleased with the decision, and was always
confident that there was no basis for a U.S. court to confirm
the award," its lawyer Cecilia Moss said in an interview.
According to court papers, the 1993 contract anticipated
that Exxon and Shell affiliates would invest billions of dollars
to extract oil from the Erha field, about 60 miles (97 km) off
Nigeria's coast, and share profits with NNPC.
But the affiliates, Esso Exploration and Production Nigeria
Ltd and Shell Nigeria Exploration and Production Co Ltd, accused
NNPC of unilaterally "lifting" more oil than was contractually
allowed, at the behest of Nigeria's government, depriving them
of billions of dollars of oil.
Pauley said Exxon and Shell still have "multiple appeals
pending" in Nigeria, and rejected their argument that it might
be difficult to collect there.
Exxon and Shell "executed a contract in Nigeria with another
Nigerian corporation containing an arbitration clause requiring
any arbitration to be held in Nigeria under Nigerian law, and it
then sought to confirm the award in Nigeria," Pauley wrote.
" They cannot now reasonably complain that their efforts to
collect will be frustrated in Nigeria."
In an Aug. 7 regulatory filing, Exxon said it did not expect
the case to materially affect its operations or financial
condition.
The case is Esso Exploration and Production Nigeria Ltd et
al v Nigerian National Petroleum Corp, U.S. District Court,
Southern (NYSE:SO) District of New York, No. 14-08445.