UNLOCKING NATURAL RESOURCES TO DRIVE SOCIO-ECONOMIC GROWTH IN NIGERIA
- Nigeria is one of the top oil and gas producers in Africa and has the continent’s largest natural gas reserves.
- Nigeria’s population is estimated to be between 160-170 million and the United Nations predicts that Nigeria could have the world’s fourth largest population by 2030.
- It therefore has a natural resource foundation to build a more prosperous economy and address human development challenges in the years ahead.
- Shell Companies in Nigeria work in partnership with the Federal and State Governments, local and international companies, investors, contractors and communities in the drive for socio-economic growth in Nigeria.
TAXES, ROYALTIES, LEVIES AND ENERGY PRODUCTION
Shell Companies in Nigeria generate revenue for the FGN through the taxes, royalties and levies they pay based on the production and supply of energy. Nigeria depends on the oil and gas industry for more than 90% of its export earnings and about 70% of government revenue (Source: Nigerian National Bureau of Statistics, 2017).
- In 2018, Shell-operated ventures in Nigeria produced an average of 617,000 barrels of oil equivalent per day (boe/d)6, with 461,000 boe/d from The Shell Petroleum Development Company of Nigeria Limited operated Joint Venture (SPDC JV) and 156,000 boe/d from the Shell Nigeria Exploration and Production Company Limited Production Sharing Contract (SNEPCo).
- The SPDC JV, which operates onshore and in shallow water, contributed about $900 million (N272.72 billion7) in taxes and royalties in 2018 while SNEPCo, which operates in the offshore deep water, contributed about $800 million (N242.42 billion8).
- The SPDC JV and SNEPCo are major gas suppliers to the Nigeria Liquefied Natural Gas (NLNG) (Shell share 25.6%) plant from their onshore and offshore fields. In 2018, NLNG paid approximately $398 million (N120.61 billion9) in income tax to the FGN.
Economic observers agree that robust growth in other areas of the economy, improved infrastructure and progress on human development is crucial to Nigeria’s long-term economic and socialw ell-being. The oil and gas industry seek to continue to provide support for this wider growth for the foreseeable future.
DIRECT ECONOMIC IMPACT, SUPPLY CHAIN AND LOCAL CONTENT
Shell Companies in Nigeria continue to support local content development as part of its contribution to the economic development of the country. The operations of Shell Companies in Nigeria have an important direct impact on driving economic activity in Nigeria.
The use of Nigerian service companies has created jobs in communities in which we operate and the continued support of local content helps to empower the country’s human resources and strengthen Nigerian contracting capacity.
- Approximately 10% of the country’s domestic gas was supplied by the SPDC JV, most of which was used for power generation.
- Around 13% of the nation’s grid connected electricity was supplied by the SPDC JV via the Afam VI power plant, which has a 650-megawatt generating capability.
- About 100 industrial and commercial customers majority of which are in Ogun, Rivers and Abia States, were supplied natural gas from Shell Nigeria Gas Limited (SNG) used for power generation and processing by industries for the manufacture of domestic products ranging from household consumables, to household utensils and hardware.
- Around $1.3 billion (N393.94 billion10) was spent by Shell Companies in Nigeria on contracts with Nigerian companies in 2018.
- SPDC was awarded the Local Content Operator of the Year 2018 by the Petroleum Technology Association of Nigeria (PETAN,) an association of indigenous technical oilfield service companies in the upstream and downstream sectors. This marks the third time Shell Companies in Nigeria have won the PETAN award, having been conferred the same award in 2013 and 2015.
SOCIAL INVESTMENT AND COMMUNITY DEVELOPMENT PROGRAMMES
Shell Companies in Nigeria work with government, communities and civil society to fund and implement programmes that have a lasting impact on lives in the Niger Delta and Nigeria as a whole.
- Direct social investment: Activities focus on community and enterprise development, education, health, access-to-energy and since 2016, road safety.
- Community development: Programmes and initiatives in the Niger Delta are also delivered through the Global Memorandum of Understanding (GMoU). A GMoU is an agreement that brings a group (or cluster) of communities together with representatives of state and local governments, SPDC and NGOs. Under the terms of the GMoUs, funding for communities are provided over five years to implement development projects of the communities' choice.
- NLNG is involved in social investment projects in the Niger Delta in capacity building and infrastructure development.
Collectively, this makes Nigeria the largest concentration of social investment spending in the Shell Group. More details about Shell Companies in Nigeria’s social investment projects can be found in the ‘Social Investment’ section.
6 — This figure is on a 100% basis.
7,8,9 — Based on 2018 exchange rate.
10 - Based on 2018 exchange rate.