Nigeria reached a $5.1-billion settlement to reimburse foreign oil companies, including Exxon Mobil Corp. and Royal Dutch Shell Plc for past operating costs.

The amount, less than the $6.8 billion previously discussed, will be settled through crude-oil sales over five years and will be interest free, Petroleum Minister Emmanuel Kachikwu told reporters in the capital, Abuja, Thursday.

“What we have been able to put together has enabled us to shave about $1.7 billion in savings for the federal government from the $6.8 billion that was owed,” he said. “The barrels to pay those will come from incremental barrels generated by the oil companies, not from the current 2.2-MMbpd production.

“In other words, if we do not meet those thresholds we will not pay the $5.1 billion,” he said.

Exxon, Shell, Chevron Corp., Total SA and Eni SpA are owed money for costs incurred from 2010 to 2015. Nigeria still owes the companies $2.6 billion from operations this year.

Shell and Total declined to comment. The other producers didn’t immediately reply to requests for comment.

Nigeria could pay more than its share of costs from October to December this year to reduce the outstanding bill for 2016 to $1.5 billion, Kachikwu said.

Revenues squeezed

Crude’s collapse has hurt the economies of oil-producing countries including Venezuela and even Saudi Arabia. Lower government revenues have prevented state-run companies from contributing their share of expenses and foreign producers — also hurt by the slump — in some cases haven’t been paid.

In Nigeria, the debt has been a point of contention for the oil companies, and the settlement could unlock investment. The agreement is likely to result in $15 billion of spending by the international oil companies, which may be announced within weeks, the minister said. That could bring back some of their projects in the country, he said.

Nigeria surpassed Angola as Africa’s biggest oil producer in October, according to datacompiled by Bloomberg. The country is restoring output shuttered by militant attacks and is exempt from any potential production cuts by the Organization of Petroleum Exporting Countries, which is due to meet in Vienna later this month.

Kachikwu sees oil production rising to 2.5 MMbpd by 2019 and 3 MMbpd by 2021. The country also plans to reduceproduction costs to $18/bbl in two years from $27 now, and to $15/bbl in four years.

Source: www.worldoil.com