News
Shell To Cut Oil Production In Nigeria …Floats $3.9bn Portfolio Investment In N’Delta
Royal Dutch/Shell is considering a further reduction in its oil production in the Niger Delta, where decades of spills and oil thefts have damaged the region’s environment and the reputation of the company.
The Tide learnt that the move is aimed at consolidating its implementation of the Nigerian Content Development policy, which favours more involvement of indigenous oil and gas firms in the industry, raising concerns among foreign oil majors that they may lose smaller assets for nothing if they don’t sell now.
The Shell Petroleum Development Company of Nigeria Limited (SPDC), had last Friday announced a strategic review of its business, saying it would consult with its international and Nigerian partners over the future of the 28 leases that produce some 750,000 barrels a day of oil.
Shell’s review of its Niger Delta oil licences came alongside a decision to go ahead with two other investments in the West African country – the Trans-Niger Pipeline loop-line (TNPL) and Phase Two of the Gbaran-Ubie gas project, which together will cost around $3.9 billion.
The pipeline investment is aimed at better protecting the company against the thefts and sabotage of its facilities.
As recently as last Thursday, Shell shut the 150,000 barrels per day Trans-Niger Pipeline after an explosion and fire at what it called a “crude oil theft point” in Bodo West, Gokana Local Government Area of Rivers State.
The Gbaran-Ubie gas project is slated to maintain supplies to the Nigeria Liquefied Natural Gas plant at Bonny Island in Rivers State and to the Gbaran-Ubie power plant in Yenagoa Local Government Area of Bayelsa State.
Making the company’s decision known last Friday, SPDC Managing Director, Mutiu Sunmonu said: “today’s announcements demonstrate our long-term commitment to Nigeria by clearly signalling our intent for the strategic direction of Shell in Nigeria.”
It would be recalled that Shell had already sold eight Niger Delta licences for a total $1.8 billion since 2010 to mostly indigenous oil and gas companies, which has resulted in huge trimming of its operations in Warri, Delta State, and relocation of some staff to Port Harcourt, Lagos and Abuja.
Earlier last week United States-based Chevron Corp said it would sell five Nigerian shallow-water oil blocks, apparently in a move to solidify its compliance with the local content policy.
The Tide investigations reveal that most foreign oil companies have suffered from widespread oil theft, and at-times, difficult relationships with local communities onshore in the Niger Delta, which have driven up the costs of operating in the region, while a long-delayed Petroleum Industry Bill (PIB) is stuck in the National Assembly, adding to industry uncertainty.
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