Message from Country Chair of Shell Companies in Nigeria
Despite production challenges in 2022, the tenacity, commitment and resilience of our people enabled us to deliver some significant achievements and continue to power progress in Nigeria.
Each year, the Nigeria Briefing Notes reflect our pride in the work of Shell Companies in Nigeria, the progress that we have achieved and the contributions we have once again made to communities.
For our businesses in Nigeria, 2022 was very much a year of two halves, with the first half proving especially difficult due to the production challenges outlined in these pages. Tragically, 2022 was also a year where our country experienced its worst flooding in recent history, with many lives lost and hundreds of thousands of people displaced from their homes.
However, despite these headwinds, the tenacity, commitment and resilience of our people allowed us to turn a corner on several fronts, leading to optimism for the beginning of 2023.
Crude theft is a serious threat to our country
Last year, we faced our biggest operational challenge in many years at SPDC, where a significant decline in crude receipts at the Bonny Oil and Gas Terminal resulted in our declaration of force majeure in March 2022. I am pleased to say that the force majeure on the Bonny export programme was lifted in March 2023.
Unfortunately, along with other operators in Nigeria, SPDC continues to face the twin challenges of sabotage and crude oil theft, each of which not only deprives our country and our people of billions of dollars of tax revenue, but also endangers people’s lives. Sadly, we were reminded of these dangers in March 2023 when a fire incident occurred at the site of an illegal connection used for crude theft on the Rumuekpe - Nkpoku trunk line in Rivers state. The line was not operational at the time of the fatal incident.
Crude theft poses a serious environmental risk that impacts not just oil and gas operations but also our communities. Our teams continue to collaborate with the Nigerian government and other stakeholders with the aim of eradicating crude theft from our facilities. There is cause for optimism, as these collaborations are starting to yield results through changes in approach. Together, we have also made progress in developing security systems that allow us to better monitor our facilities, and therefore detect and deter some of these illegal actions.
We delivered an outstanding export milestone
At SNEPCo, our deep-water operating entity, alongside our OML 118 partners and the Nigerian National Petroleum Company Limited, we continue to operate under a production sharing contract that provides exciting deep water growth opportunities.
The team at SNEPCo, most of whom I am proud to say are Nigerians, delivered an outstanding milestone early in 2023. The Bonga FPSO, the country’s first deep-water exploration and production vessel, exported its one billionth barrel of oil – a fantastic achievement.
Shell continues to be committed to Nigeria
As mentioned above, in 2022 our country was profoundly impacted by severe flooding, which affected businesses and communities in several states. Shell responded by committing $1 million to support the government’s efforts to provide relief. Beyond that, our own staff raised more than 10 million Nigerian Naira for people most in need.
Our commitment to Nigeria is not simply in response to such challenges, and in the factsheet of this report, you will find a summary of the revenue we generated for the government through taxes, the employment opportunities we created and the contributions we have made to developing local businesses.
Between them, SPDC, SNEPCo and SNG spent $34.29 million in direct social investment during 2022. A further $56.13 million has been earmarked to be paid in 2023 by SPDC and SNEPCo as a statutory contribution to the Host Communities Development Trusts (HCDT) which will benefit our communities.
While these HCDTs are one valuable outcome of the Petroleum Industry Act (PIA), we have always demonstrated resolute commitment to our communities, and we will continue to do so.
In 2022, we worked on several projects including the completion of the final phase of our Oloibiri Health Programme in Bayelsa state which has helped over 18,000 patients since its launch. The integrated healthcare project, powered by a hybrid solar electrification system, provides access to a health campus, drug distribution centre and an infant care programme.
I am similarly proud of the incredible work that we do to support entrepreneurship and education. SPDC, SNEPCo and SNG funded more than $5.6 million in academic scholarships in 2022, investments that are critical to the country’s development. Many of these programmes’ previous beneficiaries have gone on to become today’s business and political leaders in Nigeria. In tandem, we continue to improve opportunities for young Nigerians to achieve their ambitions through the Shell LiveWIRE youth programme, providing training in enterprise development and management, as well as business start-up grants.
Celebrating our business achievements
All On – the impact investment company we established in 2016 – continues to go from strength to strength, backed by $200 million of seed funding provided by Shell. By the end of 2022, All On had committed a total of $23.6 million to a portfolio of 46 renewable energy companies. By doing so, it is increasing access to commercial renewable energy products and services for the under-served, and indeed the completely unserved off-grid energy markets, with a special focus on those in the Niger Delta.
We are inspired by the possibilities that exist for developing new gas distribution solutions. SNG continues to provide gas to both business and domestic customers in Nigeria. Meanwhile, Shell’s acquisition in December 2022 of Daystar Power, an integrated solar power provider in West Africa, is well aligned with our strategy of delivering more and cleaner energy.
SPDC also took further actions on existing gas projects, such as drilling additional wells to restore supply capacity to meet its commitment to NLNG and build additional contingency margin. Additional projects are planned for 2023 to build further resilience in supply capacity.
I am also pleased that once again Shell Companies in Nigeria and our staff have been recognised with a number of awards during 2022. To name just three, we have received accolades as Best International Company of the Year (Petroleum Technology Association of Nigeria), Upstream Company of the Year (Nigeria International Energy Summit) and Leading Tax Compliant Firm in Nigeria (Federal Inland Revenue Service).
Looking to the future
Shell Companies in Nigeria have significantly contributed to Nigeria's economy and its communities for over six decades. We believe strongly in the talents, capacity and culture of the Nigerian people. Going forward we will continue that collaboration, working together to power progress in Nigeria.