The oilfield, called oil prospecting licence (OPL) 245, is at the centre of the issue and is believed to be possibly the largest oil block in Nigeria.
The Italian oil and gas company has confirmed the suspension of the arbitration at the World Bank’s dispute settlement agency.
With the move, Eni hopes to buy more time to negotiate and convert the prospecting licence into a production licence.
“Eni … has agreed with the Federal Government of Nigeria to mutually and temporarily suspend the arbitration proceedings in order to discuss with the government the necessary steps for achieving the conversion of the licence from prospecting into mining (extraction),” an Eni spokesperson told the publication.
The development comes few days after Nigeria began to withdraw $1.1bn (N903.44bn) in civil claims against Eni stemming from suspicions of wrongdoing in the OPL 245 agreement.
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An OPL permits a business to search for oil; but, to produce and export oil, the licence must be converted to an oil mining licence if a recoverable amount of oil is discovered.
According to the sources, Eni requested to stop the arbitration on 16 November 2023, just a few days after the proceedings began.
Currently, Nigeria is negotiating for better terms for the block licence than those that have been previously agreed, they added.
A request for comment from was not immediately answered by the Nigerian Federal Government.
Eni and Shell secured rights for the OPL 245 offshore oilfield in 2011, but the area was never explored due to several disputes.
In 2022, an appeals court in ruled that Eni, its CEO and Shell were not guilty in a corruption prosecution involving the deal for OPL 245.
Last month, at the opening of a preliminary hearing in a Milan court on an alleged fraud over a failed 2019 Eni tanker sale, the first indications appeared that Eni and the Nigerian Government were making progress towards resolving their outstanding disagreements.
Following that, Eni retracted its fraud complaint against Oando, a Nigerian corporation, and its former CEO, Boyo Omamofe.
In September, Eni agreed to sell its wholly owned subsidiary, Nigerian Agip Oil Company, to Oando.