X-raying 82 years of Shell operation in Nigeria
For over 82 years ago — petroleum company, Royal Dutch Shell, has been in Nigeria’s oil rich Niger Delta region for one single reason – crude.
Shell is the biggest investor in the oil and gas industry across countries in the West African sub region.
Shell is an integrated energy company that aims to meet the world’s growing demand for energy in ways that are economically, environmentally and socially responsible.
Shell in Nigeria
Shell has a history of over 82 years in Nigeria and the largest footprint of all the international oil and gas companies operating in the country. Its companies and investments have played a pioneering role in onshore, shallow and deep water oil exploration and production. Shell has also been at the forefront of gas development, producing and delivering gas to domestic consumers and export markets for over 40 years.
Exploration and Production:
Most of our exploration and production activities are concentrated in onshore, shallow and deep water.
Shell Petroleum Development Company of Nigeria (SPDC)
SPDC is the largest private-sector oil and gas company in Nigeria. It is the operator of a joint venture between the government-owned Nigerian National Petroleum Corporation – NNPC (55%), Shell (30%), Elf Petroleum Nigeria Limited – a subsidiary of Total (10%), and Agip (5%). SPDC’s operations in the Niger Delta are spread over 30,000 square kilometres.
Shell Nigeria Exploration and Production Company (SNEPCO)
SNEPCO, 100% owned by Shell, was formed in 1993 to develop Nigeria’s deep-water oil and gas resources offshore – the new frontier for the country’s energy industry at the time. It signed a production-sharing contract with NNPC to operate two deep-water licences. The company produces oil and gas in water depths up to 2,500 metres and has made some significant discoveries.
SNG currently operates a world class gas transmission and distribution network of approximately 115km in Nigeria. It operates several systems including Agbara-Ota in Ogun state, the Aba Cluster in Abia State the Port Harcourt Cluster in Rivers State. Over the years, SNG has built a reputation as the safest & most reliable gas distribution company in Nigeria.
Shell Nigeria has been very active in the Liquefied Natural Gas project since its inception in the mid-1960s. NLNG is a joint venture incorporated in 1989 to produce LNG and natural gas liquids for export.
It was Nigeria’s first LNG project. Shell holds a 25.6% share, together with NNPC (49%), Total (15%) and ENI (10.4%).
The NLNG plant at Bonny Island has six processing units (trains) with total processing capacity of 22 million tonnes a year of LNG and up to 5 milliontonnes of natural gas liquids (LPG and condensate)
NLNG accounts for approximately 7% of the world’s total LNG supply
NLNG supplies power to more than 200,000 residents and businesses on Bonny Island via a rural electrification scheme.
Despite its investment in Nigeria’s oil and gas industry, the company has continued to receive backlash from certain quarters over alleged corruption, oil theft and environment pollution resulting from oil spillage and gas flaring.
A brief walk into the activities of Shell in the country shows that in 1936, the company established a Nigerian venture with the precursor company of BP Plc. It’s first shipment of oil from Nigeria takes place in 1958 – same year crude oil was discovered in Oloibiri, a small community in Ogbia local government area located in Bayelsa state.
In April 1973, the Nigerian government took a stake in the venture and in few years, the government increased its stake and BP backed out of the agreement.
In 1979, the Shell Petroleum Development Company of Nigeria (SPDC) was established, incorporating assets of the older Shell-BP consortium. Over time, the Nigerian National Petroleum Corporation (NNPC) — which was established in 1777 – took ownership of 55 percent of the company, Shell owned 30 percent, France’s Total owned 10 percent and Italy’s Eni had 5 percent. Shell was still the operator.
In 1990, the Movement for the Survival of the Ogoni People (MOSOP), led by late environmental rights activist, Ken Saro-Wiwa, started its campaign for a fairer share of oil wealth for the Ogoni people – who were the natives of the area — living on oil fields and compensation for environmental damage.
In January 1993, MOSOP organised protests of around 300,000 Ogoni people against Shell and oil pollution. Nigeria’s military government occupied the region.
In April 1993, Shell formed the Shell Nigeria Exploration and Production Company Limited (SNEPCO) which signed Production Sharing Contracts to develop offshore oil and gas interests. Same year, Shell ceased production in Ogoniland.
In November 1995, Saro-Wiwa and eight other MOSOP leaders are executed by Sani Abacha’s military government on alleged murder charges, to worldwide horror. Nigeria earned a suspension from the Commonwealth.
In the late 1990s, Shell shifted its focus to offshore exploration, where it enjoyed better margins and fewer threats of attack by militants in the region.
Shell resumed production at the giant Bonga offshore field in 2005, two years after SPDC began pumping over 1 million barrels of oil per day in 2003.
A year later in 2000, a militant group, the Movement for the Emancipation of the Niger Delta (MEND) emerged and began to attack Shell facilities. MEND was seeking a great share of oil wealth for the Delta’s people and remediation for oil spills. SPDC pump stations and platforms in Niger delta are attacked and production fell.
In 2008, large spills, a result of operational faults, hit the community of Bodo in Ogoniland in the Niger Delta. Tens of thousands of barrels of oil are spilt resulting in environmental pollution in the area.
SPDC sold some onshore fields in January 2010 and said it is no longer looking to Nigeria for growth. A year later, Shell and Italy’s Eni acquired Oil Production Licence (OPL) 245, a large offshore field, for $1.1 billion from local company Malabu.
In August 2011, A United Nations report criticised Shell and the Nigerian government for contributing to 50 years of pollution in Ogoniland which it says needs the world’s largest oil clean-up, costing an initial $1 billion and taking up to 30 years.
In March 2012, a group of 11,000 Nigerians from Bodo, Ogoniland, instituted a suit against Shell at the London High Court, seeking compensation for the 2008 oil spills.
In January 2013, a Dutch court rules that Shell could be held partially responsible for pollution in the Niger Delta. The court said the company should have prevented sabotage at one of its facilities. Four Nigerians and Friends of the Earth filed the suit originally in 2008 in the Netherlands.
Shell accepted liability for the Bodo spills in January 2015, agreeing to pay 55 million pounds ($83 million at the time) to Bodo villagers and to clean up their lands and waterways.
In May 2018, a court case against Shell and Eni over the 2011 OPL 245 acquisition started in Milan. Nine current and former executives and contractors, including ENI Chief Executive, Claudio Descalzi, were accused by Italian prosecutors of paying bribes to secure the license to explore OPL-245. The field holds an estimated nine billion barrels of oil but has never entered production.
This article first appear in Pulse.ng in September
