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The briefing notes cover the operations of the Shell Petroleum Development Company of Nigeria Ltd (Operator of the NNPC /Shell /Total /Agip joint venture), Shell Nigeria Exploration and Production Company (SNEPCo), and Shell Nigeria Gas Limited (SNG). All files are PDF and all links open in a new window.
SPDC is Nigeria’s oldest energy company, and all Shell Companies in Nigeria have a long term and continuing commitment to the country, its people and the economy. Today Shell produces oil and gas from land and swamps in the Niger Delta and from deep-water reserves some 120 km off the coast of Nigeria. In 2012, the total production from Shell-run operations averaged 949,000 barrels of oil equivalent per day (boe/d). Shell also has an interest in Nigeria’s Liquefied Natural Gas (LNG) plant at Bonny, which exports gas to different parts of the world.
The Niger Delta continues to be a challenging place to operate for many reasons.
There is a fundamental lack of basic infrastructure in many areas, with poverty, lack of employment opportunities, widespread criminality and other factors all contributing to the social and economic crisis in the region.
Criminality has expressed itself in many forms over the years – attacks on facilities, kidnapping, militancy and, most worrisome in recent years, crude oil theft and illegal refining.
In 2012, there were over 80 reported incidents of crude oil theft from the facilities of the Shell Petroleum Development Company of Nigeria Limited (SPDC), several accompanied by vandalism, spills and fire.
SPDC supports the government—led Ogoni reconciliation process. On the request of the government, SPDC and its joint venture partners financed the UNEP report and provided data as required.
The report highlighted significant environmental impacts from oil pollution in parts of Ogoniland and called on government, industry and communities to take action to put an end to all forms of oil contamination (including crude oil theft and illegal refining) and begin a comprehensive clean up.
SPDC has welcomed the UNEP report and is advocating more concerted efforts by all stakeholders in the hopes that the report will drive real change in Ogoniland and the wider Niger Delta.
Shell Companies in Nigeria awarded 96% of their total number of contracts to Nigerian companies (total value of $2.4 billion) in 2012, an increase of $1 billion above the 2011 figure. These contracts represent 64% of the total spend on contracts during the year. In recognition of the fact that lack of access to capital is a key blocker to the growth of Nigerian companies, SPDC launched a $5 billion Contractor Support Fund Scheme with five (5) leading Nigerian banks. This scheme provides companies with SCiN contracts affordable access to credit to enable them execute their contracts successfully.
In 2012 the Shell Kobo Fund, a Community Content initiative launched in 2011 enabled small Niger Delta contractors to access loans needed to finance the supply of goods/services to SPDC.
This made a huge impact on the capability of these contractors to finance contracts awarded to them by SPDC.
In recognition of the impact of this scheme, SPDC was awarded the Social Enterprise Report and Awards (SERAs) recognition for “Wealth and Income Generation (Poverty Reduction)” in 2012.
The Shell Kobo Fund is a four billion Naira ($27 million) community contractor-financing scheme put in place by SPDC in collaboration with three top Nigerian Banks — First Bank of Nigeria Plc, United Bank for Africa Plc and Zenith Bank Plc.
SPDC is at the forefront of gas development and utilization in Nigeria, having pioneered the production and delivery of gas to consumers for over 40 years.
In the 1960s SPDC JV began supplying gas to industries in Trans-Amadi in Port Harcourt, Aba territories, and to power plants at Afam in Rivers State in the Niger Delta.
For most of that time until about 1998, SPDC JV was the sole supplier of gas in the country.
After 1998, SPDC remained the single largest supplier at about 70% of the country’s domestic gas supply (with a high percentage utilised for power generation) until the recent portfolio optimization when it divested some of its assets.
These divestments are part of SPDC’s strategy of refocusing its onshore interests in Nigeria and supporting the Federal Government’s aim of developing indigenous Nigerian companies in the country’s upstream sector.
Shell operations in Nigeria generate billions of dollars in revenue in terms of taxes, duties, royalties, fees and the like, for the government.
The joint venture operated by The Shell Petroleum Development Company of Nigeria Limited (SPDC) has contributed about $42billion to the government in the past five years (2008–2012).
Apart from this, Shell Nigeria Exploration and Production Company (SNEPCo), which manages our offshore business in deep water, has paid nearly $6 billion in taxes and royalties over the same period.
As a statutory obligation, Shell-operated ventures also contributed over $178.3 million to the Niger Delta Development Commission (NDDC) (Shell share $68.2 million).
SNG currently operates in the industrial clusters of Agbara, Ota, Igbessa and Aba, as well as in Port Harcourt, Rivers State, to supply natural gas used as fuel for various industrial processes and power generation.
Since inception, SNG has helped to drive economic growth by enabling the industries currently served on its network to use natural gas, a cleaner substitute for diesel and other liquid fuels.
Natural gas is abundantly available in Nigeria at an affordable price in comparison to other fuels that industries use.
It is also the cleanest of all the fossil fuels and helps reduce the emissions of pollutants into the atmosphere.
Natural gas supplied by SNG through its network has resulted in significant savings to its customers and enabled many of them to expand their production lines.
By the end of 2012, SNG distributed an average of about 30 million standard cubic feet a day of natural gas produced from the Niger Delta to industries and factories in its areas of operation.
Many multinational and local companies, for example, GlaxoSmithKline Consumer Nigeria Plc, Unilever Plc and Nestle Nigeria Plc are among the customers that are currently being supplied.
In many oil fields gas is produced with crude oil when it is brought to the surface.
This is particularly true in the Niger Delta where much of the oil has a high proportion of this ‘associated’ gas.
When The Shell Petroleum Development Company of Nigeria Limited (SPDC) first built many of its production facilities in the 1950s, there was little demand or market for gas in many parts of the world, including Nigeria.
So, associated gas (AG) was usually burned off safely – a process called flaring.
This remained an accepted industry practice as SPDC established a major oil operation across the Niger Delta.
Over the years, SPDC has improved on how it engages with local communities to deliver these projects.
In 2006, it introduced a new way of working with communities called the Global Memorandum of Understanding (GMoU).
The GMoUs represent an important shift in approach, placing emphasis on more transparent and accountable processes, regular communication with the grassroots, sustainability and conflict prevention.
By the end of 2012, SPDC had signed agreements with 33 GMoU clusters, covering 349 communities, about 35% of the local communities around our business operations in the delta.
In 2012, a total of 723 projects were successfully completed through GMoUs (including specific project-GMoUs).
To date, the cumulative total funding for GMoU projects and programmes is over $117 million (with over $30 million in 2012 alone).
Nine of the 33 Cluster Development Boards (CDB) have grown to become registered foundations now receiving third party funding.
In November 2005, Shell Nigeria Exploration and Production Company Limited (SNEPCo) began to produce oil and gas at Bonga, 120 km offshore Nigeria in the Gulf of Guinea. The project, the country’s first in deepwater, increased Nigeria’s oil capacity by 10%. First discovered in 1995, Bonga lies in water 1,000 plus metres deep across an area of 60 square km. It has the capacity to produce more than 200,000 barrels of oil a day and 150 million standard cubic feet of gas a day. By the end of December 2012, Bonga had produced about 450 million barrels of oil.
The Shell Petroleum Development Company of Nigeria Limited (SPDC) is committed to cleaning up all spills from its facilities as fast as possible regardless of cause.
Majority of the spills in the Niger Delta are the result of third party interference, mainly sabotage, theft of equipment or leaks caused by crude oil thieves drilling into pipelines or opening up wellheads to steal oil.
On average, third party interference accounts for around 73% of all oil spill incidents and around 76% of all oil volume spilled from SPDC facilities in the delta over the last five years (2008-2012).
Unfortunately, the rest of the volume is as a result of operational spills.
Any spill is a serious concern and SPDC staff and contractors are working hard to eliminate operational spill incidents.
The largest economic contribution by Shell Companies in Nigeria is through the taxes and royalties we pay, the government’s participation in our operations and the energy we produce.
Nigeria depends on the oil and gas industry for approximately 95% of foreign exchange earnings and about 80% of government revenue.
It also contributes to developing the country’s human capital and local contracting capacity in related areas.
The joint venture operated by The Shell Petroleum Development Company of Nigeria Limited (SPDC) has contributed about $42billion to the government in the past five years (2008– 2012).
The Federal Government receives about 95% of the revenue after costs from the SPDC operated joint venture.
Similarly, Shell Nigeria Exploration and Production Company of Nigeria Limited (SNEPCo), which operates in the offshore deep water, has contributed in excess of $25billion to the government in the last five years.