Shell says anti-theft protection mechanisms pay off

Osagie Okunbor

. As production ramps up to 200kb/d oil, 1.4bscf/d gas in 2023

By Clara Nwachukwu

To reinforce the effectiveness of efforts by the joint venture (JV) partners to curb endemic oil and gas theft in the country’s petroleum industry, Shell Companies in Nigeria (SCiN), said they were able to ramp up daily production to about 200,000 barrels of oil (kbd), and 1.4 billion standard cubic feet of gas (bscf) in 2023.

Shell attributed the rise in output to “close collaboration with key stakeholders, including the Nigerian government and our partner Nigerian National Petroleum Company Limited (NNPC Ltd.), to reduce crude oil theft across our production and transmission infrastructure in the Niger Delta.”

Recall that due to the rising spate of theft, Nigeria continues to struggle to increase oil and gas production to meet its output allocation by the Organisation of the Petroleum Exporting Countries (OPEC).

According to OPEC, Nigeria’s crude oil production averaged 1.335 million barrels per day (bpd) in December 2023, which was a 6.8% increase from November 2023, and the highest production in Africa for the month. 

By year end, the total volume of crude produced in 2023 was put at 552,841,582 barrels (457,866,880 barrels of Oil and 94,974,702 barrels of Condensate), according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) 2023 annual report.

Specifically, Country Chair, SCiN, Osagie Okunbor, in his message in the latest Nigeria Briefing Notes 2023. explained that “SPDC also has anti-theft protection mechanisms for key infrastructure such as wellheads and manifolds.

“The programme to protect wellheads with steel cages continues to help deter theft.”

Mr. Okunbor further said: “Other pipeline technologies have been introduced including specialised intelligent pigging and pipeline pressure monitoring.

“These have deterred illegal activities, prevented crude oil losses across the network and enabled an improvement in crude delivery through our joint venture pipelines to export terminals.”

All these are in addition to “… a combination of successful drilling, bringing on new oil wells, optimising reservoir and facility management, and achieving excellence in asset management.”  

Despite these efforts, the SCiN Country Chair decried that,

“Regrettably, however, there were still spills, caused mostly by crude theft and other illegal activities affecting SPDC’s onshore operations.

“SPDC has continued to clean up these spills and to remediate the affected areas. Closer engagement with communities has helped us to access spill locations faster, minimising environmental impacts of such spills.”

These (technologies) have deterred illegal activities, prevented crude oil losses across the network and enabled an improvement in crude delivery through our joint venture pipelines to export terminals.

Pipeline vandalism, theft

Indeed, increasing spate of oil and gas theft has had enormous economic implications, as criminals tap into pipelines, siphon off crude oil, and disrupt the supply chain. 

In August 2023, the National Security Adviser (NSA), Nuhu Ribadu, said the country was losing 400,000bpd to thieves. 

Also, in October last year, Ned Nwoko, a lawmaker in the Nigerian Senate, reiterated that pipeline vandalism and oil bunkering have led to a significant socio-economic crisis in Nigeria. 

While a former Minister of State for Petroleum Resources, in the Muhammadu Buhari’s administration, Timipre Sylva, had said Nigeria lost at least 700,000bpd to thieves in 2022.

While there have been controversies around Nigeria’s actual daily production and how much of it is lost,

ResearchGate, in a report titled: “Economic Losses through Oil Theft in Nigeria: A 4-year (2019 – 2022) Analysis,” described production theft as a “great economic loss that could have been used to sustain the dwindling economy.”

According to the report, “Nigeria lost to oil theft an unprecedented oil revenue of $2.1billion, $1.9billion, $7.2billion and $22.4billion for 2019, 2020, 2021 and 2022 respectively.”

The report had reviewed the economic implications of oil theft arising from vandalism of crude oil pipes, illegal petroleum refinery and bunkering in the Niger Delta region over a period of four years.

Performance of Shell Companies

SCiN has operations in seven different areas of Nigeria’s energy sector, and include:

  • Onshore: The Shell Petroleum Development Company of Nigeria Limited (SPDC) – which Produces onshore and shallow-water oil and gas.
  • Deep water: Shell Nigeria Exploration and Production Company Limited (SNEPCo) – focused on deep-water oil and gas production.
  • Domestic gas: Shell Nigeria Gas Limited (SNG) –
  • Gas for export: Nigeria Liquefied Natural Gas Company Limited (NLNG)
  • Power: Daystar Power – provides integrated solar power to commercial and industrial businesses across West Africa.
  • Renewable: All On – an impact investment company seeded by Shell to facilitate the creation and delivery of clean energy products and services to under-served3 and unserved off-grid communities in Nigeria, with a special focus on the Niger Delta region.

In his message in The Nigeria Briefing Notes, Mr Okunbor, said the report reflect the work of SCiN, the progress achieved, and the contributions made to communities and the country in 2023.

He said: “In 2023, our teams worked to lay an even stronger foundation for solid performance. We have demonstrated that through our focus on performance, discipline and simplification, we can deliver impressive results.

“These benefit not just our shareholders but all our stakeholders and make a true difference to the lives of the communities in which we operate.”

Expressing his excitement over the production uptick, Mr Okunbor said: “SNEPCo, our deep-water business, recorded improvement in availability and production at both Bonga, the operated asset, and Erha, the non-operated asset.

He added that Bonga achieved its highest controllable availability since 2017.

Aside from the production increases, the Shell helmsman also informed that SPDC has now taken the final investment decision (FID) for the construction of a dedicated upstream facility to supply 100 million scf/d from the Iseni field to the Dangote Fertiliser and Petrochemical Plant in Lekki, Lagos State, for an initial duration of 10 years.

Mr Okunbor continued: “In 2023, Shell Nigeria Gas (SNG) progressed discussions on a collaboration to develop a new gas distribution infrastructure network in Oyo State, the fourth state where SNG is active.

“The proposed new gas distribution infrastructure will play a pivotal role in distributing more reliable energy to industrial and commercial customers in the state.

“The project offers an opportunity to increase the utilisation of domestic gas in both the state and Nigeria as a whole. This collaboration is poised to contribute to growing local industries and creating employment opportunities.

“For solar energy, Daystar Power grew its business with a focus on hybrid solar systems for industrial customers. The company is now looking to grow its portfolio through installations in its existing markets – mainly in Nigeria – as well as in markets such as South Africa, into which Daystar expanded last year.”

For impact investment, he said that All On now has a total portfolio of 49 renewable energy companies, which have delivered more than 130,000 energy connections to under-served areas of Nigeria.

“In 2023, All On delivered professional services support to approximately 20 companies through the All On Hub. Through this support, one of the investees, Auxano Solar, successfully launched its 100 MW Solar PV assembly plant.

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