We have too much at stake to leave Nigeria, says Shell

Bonga FPSO

. Commits to devt of cleaner energies

. Says Ogoni land clean-up 70% completed  

Clara Nwachukwu

Amid rising speculations, the Nigerian unit of Anglo-Dutch Shell says it has no intension of leaving Nigeria, seeing as it has too much at stake to just pack up and go.

This is even as the company disclosed that it paid about $4.6billion in taxes and royalties to the Federal Government in 2019, and another $2.8billion to the Niger Delta Development Commission (NDDC) from year 2000 to date.   

Continued divestment of its onshore assets in Nigeria is fuelling such conjectures, especially as many foreign investors had closed shop due to the harsh operating environment.

Shell has stakes in 19 oil mining leases (OMLs) under the SPDC joint venture (JV) in Nigeria’s onshore oil and gas, in which it expects to rake in a couple of billions of dollars from their sale.

Reiterating its continued interest and investments in Nigeria, the Country Head/Corporate Relations Director, Shell Petroleum Development Company (SPDC), Igo Weli, said the energy company is merely reviewing its operations in line with current operating realities.

There is no way we are going to leave Nigeria. The economics of the environment, timing and structure is what we are looking at.

Environment risks

Weli, in an interactive session with journalists in Lagos yesterday, said it was no longer economically viable for Shell to retain its onshore oil and gas assets given the associated risks.

He said: “There is no way we are going to leave Nigeria. The economics of the environment, timing and structure is what we are looking at.

“We are reviewing our operations and looking at our upstream and deep water assets to strengthen our presence there.”

This follows the renewal of the OML 118 production sharing contract (PSC) for another 20 years. The field hosts the Bonga deep water project.

There is also the final investment decision (FID) on NLNG Train 7, which he said is huge on local content development and will add great value to Nigeria’s oil and gas sector and the economy at large.

He also dispelled the rumours that Shell was stuck with the onshore assets on offer due to pending litigations, and paucity of funds due to lack of support by international financiers on growing environmental concerns.

According to him, the commercial details are still being worked out at the highest level and awaiting regulatory approval.

Through this programme, greenhouse gas emissions have been reduced and a valuable energy source redirected to domestic and international customers.

Cleaner fuels      

This clarification comes as Weli reiterated Shell’s commitment to producing cleaner fuels preparatory to energy transition.

He argued that despite the environmental concerns, “fossil fuel will still be here for many years to come,” adding that “We are looking at all assets while transiting to cleaner fuels.”

For instance, Shell, in its Nigeria Briefing Notes 2021, said: “the SPDC JV has decreased routine flaring by almost 90% in Nigeria since 2002, turning an environmental problem into a source of energy for Nigerians and a financial flow for the joint venture and the Nigerian government.

“Shell Companies in Nigeria (SCiN) have made a series of investments and forged partnerships over the last 20 years to capture and commercialise associated gas for domestic and export markets.

“Through this programme, greenhouse gas emissions have been reduced and a valuable energy source redirected to domestic and international customers.”

According to the Shell Notes, these investments support the federal government’s plan to harness the potential of Nigeria’s natural resources to bring power and prosperity to the people.

This will also boost efforts to develop the gas sector to drive the domestic economy and for export, as the energy transition demands increased supply of fuels like natural gas.

Specifically, it said natural gas “emits between 45% and 55% fewer greenhouse gas emissions and less than one-tenth of the air pollutants than coal when used to generate electricity.”

Besides, through its All On energy unit, Shell said it is helping to “finance businesses that use emerging clean energy technologies to support the creation and growth of sustainable off-grid energy businesses for urban and rural customers.”

Progress is being made in governance, funding and clean-up activities.

Ogoni land clean-up

On the controversial Ogoni land clean-up, which has lingered for more than 10 years, Weli said remediation activities are about 70% completed and expected to reach up to 90% by this year’s end.

He said the success of the clean-up especially in Bodo, one of the communities in Ogoni land, is such that the techniques/technologies could be replicated across the Niger Delta.  

In 2011, the United Nations Environmental Programme (UNEP), published a report on Ogoni land and made recommendations to all stakeholders – the SPDC JV, the government and communities.

The report also noted that the environmental restoration of Ogoni land was possible but could take up to 30 years.

However, the Shell Notes said: “progress is being made in governance, funding and clean-up activities.”

To this end, of the $1 billion trust fund recommended by UNEP for the restoration of Ogoni land, the SPDC JV agreed to contribute $900 million of which $360 million have so far been released.

Weli added that another tranche of $80 million will be paid this year, noting that funding has never been an issue with the remediation process, but is bogged down by bureaucratic bottlenecks.

Shell said it had exited production from Ogoni land since 1993, and transferred operatorship of the assets to the Nigerian Petroleum Development Company (NPDC). However, its Trans Nigeria Pipeline (TNP), which carries crude oil from various companies, passes through Ogoni land.

The UNEP report recorded 67 sites for remediation, and for coordination of clean-up activities, the Hydrocarbon Pollution and Remediation Project (HYPREP), was created in 2017.

According to Weli, HYPREP has completed the first phase dealing with the less complex areas and not moving on to the more complex stage around the shorelines.

In January 2020, HYPREP awarded a further 29 contracts for remediation on 29 lots covering eight polluted sites.

The Shell Notes said the SPDC JV has acted on all the UNEP recommendations specifically addressed to it and completed most.

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