By Ndubuisi Micheal Obineme
Following the asset divestment of Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium of five companies, Osagie Okunbor, Country Chair of Shell Companies in Nigeria has said that Shell is not leaving Nigeria despite divesting its SPDC asset, adding that its deepwater and gas businesses will remain an integral part of Shell’s activities in Nigeria.
Okunbor made this known in his remark published on Shell Nigeria’s latest briefing notes, obtained by The Energy Republic, outlining the Company’s operational excellence in Nigeria’s energy sector including challenges, growth opportunities in its business activities, and the Company’s contribution towards the socio-economic development in the communities where they operate.
For over 60 years, Shell Companies in Nigeria (SCiN) have been operating, powering progress, and building sustainable economic development in terms of generating revenue for the Nigerian government through taxes, as well as creating employment, and project opportunities for Nigerians and indigenous companies.
In Nigeria, Shell operates four major companies known as The Shell Petroleum Development Company of Nigeria Limited (SPDC), Shell Nigeria Exploration and Production Company Limited (SNEPCo), Shell Nigeria Gas Limited (SNG), and Daystar Power. These four businesses are wholly owned by Shell Plc and together are part of the entities known as the Shell Companies in Nigeria (SCiN).
In addition, Shell Gas B.V. has a 25.6% shareholding in Nigeria LNG Limited (NLNG) which processes and exports LNG to global markets. SPDC and SNEPCo also own All On Partnerships for Energy Access Limited (All On) by Guarantee, an impact investment company whose purpose is to improve access to energy in Nigeria.
Speaking on Shell’s SPDC asset divestment, Okunbor said, “It is important to emphasize that Shell is not leaving Nigeria and will remain a major partner of the country’s energy sector through its Deep Water and Integrated Gas businesses.
“Our collective focus remains on the delivery of safe operations and care for our people. I have faith in the commitment and resilience of our people in navigating the transition as we focus on growth opportunities.”
It will be recalled in January 2024, Shell announced the sale of SPDC to Renaissance, a consortium of five companies comprised of ND Western, Aradel Energy (former Niger Delta E&P), First E&P, Waltersmith and Petrolin for $2.4 billion, a historic shift in a crucial yet controversial part of the energy giant’s global operations.
However, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), the regulator of upstream activities in the Nigerian oil and gas industry, has said the Commission has commenced the due diligence process before approving the Shell asset divestment deal.
If approved by the Nigerian government, the deal would fulfill Shell’s long-term goal of extracting itself from a challenging operating environment in the Niger Delta. For decades, the company has been at odds with local communities over oil spills and accusations of human rights violations.
Adding to this, Okunbor stated that the completion of Shell’s SPDC asset divestment transaction remains subject to regulatory approvals and other conditions precedent.
He also clarified that the transaction is developed to preserve the full range of SPDC’s operating capabilities for the benefit of the SPDC joint venture.
“Our collective focus remains on the delivery of safe operations and care for our people. I have faith in the commitment and resilience of our people in navigating the transition as we focus on growth opportunities.”
Oil and Gas Production
Shell Companies in Nigeria produce, distribute, and export oil, gas, liquefied natural gas (LNG), and other energy products in Nigeria.
Shell Nigeria Exploration and Production Company Limited (SNEPCo) recorded an increase in oil production at the Bonga field by 36.6 percent to 138,000 barrels per day in 2023, compared to 101,000 in 2022. The production growth was driven by the drilling of new wells, optimizing reservoir and facility management, and excellent asset management.
Bonga is Nigeria’s first deep-water oil and gas development and for the Shell Nigeria Exploration and Production Company (SNEPCO). Bonga began production in November 2005 through the 225,000 barrels-per-day capacity Bonga FPSO, anchored 120 kilometers offshore. The Bonga FPSO exported its one billionth barrel of oil in February 2023.
Speaking about Shell production growth in Nigeria, OSAGIE OKUNBOR, Country Chair of Shell Companies in Nigeria also said, “By the end of 2023, SPDC increased its oil and gas production to circa 200kb/d and 1.4bscf/d respectively – a demonstration of the ongoing significant potential of the business.
The operations have resulted in the remittance of taxes and royalties to the Government of Nigeria to finance development, the development of indigenous contractors and service providers, and a wide-ranging social investment portfolio that has improved lives across the country.
Overall, Shell paid $1.09 billion in corporate taxes and royalties to the Nigerian government (SPDC $442 million and SNEPCo $649 million) in 2023, compared with $1.36 billion in 2022.
In 2023, SPDC, SNEPCo, and SNG awarded $1.98 billion in contracts to Nigeria-registered companies, marking a 3% increase in value from the previous year. SPDC, in compliance with statutory requirements, paid $112.5 million in 2023 to the Niger Delta Development Commission (NDDC), while SNEPCo and its partners paid $30 million.
Shell Companies in Nigeria directly employed more than 2,500 people (of whom 96% were Nigerian nationals) with over 9,000 contractors supporting operations.
Despite its SPDC asset divestment, Shell has affirmed that the management of SPDC joint venture facilities, which is responsible for supplying feed gas to Nigeria LNG, will continue to receive its support.
In his remarks, Okunbor disclosed that SPDC has also approved the final investment decision for the construction of a dedicated upstream facility to supply 100 million standard cubic feet of gas per day (MMScF/d) from the Iseni field to the Dangote Fertiliser and Petrochemical Plant in Lekki, Lagos State, for an initial duration of 10 years.
“SNEPCo, our deep-water business, recorded improvement in availability and production at both Bonga, the operated asset, and Erha, the non-operated asset. This performance was driven by a combination of successful drilling, bringing on new oil wells, optimizing reservoir and facility management, and achieving excellence in asset management. Bonga achieved its highest controllable availability since 2017.”
Despite its production growth, Okunbor noted that there were some oil spills caused mostly by crude oil theft and other illegal activities affecting SPDC’s onshore operations.
“SPDC has continued to clean up these spills and to remediate the affected areas. Closer engagement with communities has helped us to access spill locations faster, minimizing the environmental impacts of such spills.
“We have worked in close collaboration with key stakeholders, including the Nigerian government and our partner Nigerian National Petroleum Company Limited (NNPC Ltd.), to reduce crude oil theft across our production and transmission infrastructure in the Niger Delta.
“SPDC also has anti-theft protection mechanisms for key infrastructure such as wellheads and manifolds. The programme to protect wellheads with steel cages continues to help deter theft. Other pipeline technologies have been introduced including specialised intelligent pigging and pipeline pressure monitoring. These have deterred illegal activities, prevented crude oil losses across the network, and enabled an improvement in crude delivery through our joint venture pipelines to export terminals,” he explained.
Gas Development
In 2023, Shell Nigeria Gas (SNG) progressed discussions on a collaboration to develop a new gas distribution infrastructure network in Oyo State, the fourth state where SNG is active.
In May 2024, the Oyo State Government and Shell Nigeria Gas (SNG) signed an agreement to develop a gas supply and distribution infrastructure that will deliver gas to industrial and commercial users in the state. SNG will build and operate the gas distribution network, which will serve customers across Oyo State for 20 years.
“The new gas distribution infrastructure will play a pivotal role in distributing more reliable energy to industrial and commercial customers in the state.
“The project offers an opportunity to increase the utilization of domestic gas in both the state and Nigeria as a whole. This collaboration is poised to contribute to growing local industries and creating employment opportunities.
In addition, Shell Nigeria Gas has made notable progress in the construction of the distribution infrastructure to provide gas to the Nigerian Content Development and Monitoring Board (NCDMB) industrial gas park in Bayelsa State. The industrial park is an initiative by the NCDMB to create an industrial hub for companies, with access to reliable energy supply via domestic gas. SNG’s target is to deliver gas to the park in 2025.
Renewable Energy
For solar energy, Okunbor stated that Daystar Power, part of Shell Companies in Nigeria, grew its business with a focus on hybrid solar systems for industrial customers.
He said the company is now looking to grow its portfolio through installations in its existing markets – mainly in Nigeria – as well as in markets such as South Africa.
Presently, Daystar Power is operating in seven countries including Nigeria, Ghana, Senegal, and Ivory Coast, and runs more than 400 power installations. It has installed more than 50 megawatts of solar power for commercial and industrial customers. Daystar is now expanding its operations into South Africa. Daystar Power signed an agreement with Nigerian Breweries to install and operate a 4.2 Megawatt-Peak (MWp) solar plant and 2 Megawatt-Hour (MWh) battery storage system, marking one of the largest solar and battery storage projects for an industrial manufacturer in Nigeria. When completed, the hybrid solar solution is expected to generate over 5,200 MWh of electricity annually, reducing dependence on diesel generators.
Meanwhile, All On, Shell’s impact investment business increased to 49, with a total of $27.9 million in investments committed to be paid. Since its inception in 2017, All On has delivered more than 130,000 energy connections and 16.3 MWh installed capacity through its investee companies.
Based on our findings, All On disbursed $3.9 million in 2023 to developers, resulting in over 8,600 energy access connections.
“All On – our impact investment business – now has a total portfolio of 49 renewable energy companies, which have delivered more than 130,000 energy connections to under-served areas of Nigeria.
“In 2023, All On delivered professional services support to approximately 20 companies through the All On Hub. Through this support, one of the investees, Auxano Solar, successfully launched its 100 MW Solar PV assembly plant.”
Social Investment
In 2023, SNEPCo, in partnership with NNPC Ltd. and its co-venturers, remodeled the ‘E’ Wing of the arrival hall of Nigeria’s busiest airport, the Murtala Muhammed International Airport in Lagos. The initiative has enhanced passengers’ experience with reduced immigration clearance time and more effective queue management.
SPDC, SNEPCo, and SNG spent $42.2 million on direct social investment in 2023. These investments
fund community, health, education, road safety, and enterprise programs. It includes 10 healthcare centers in the Niger Delta and signature intervention projects throughout Nigeria. Supported by funding from SPDC, SNEPCo, and their partners, the programme continued its commitment in 2023, assisting an additional 17,358 people.
Since its inception in 2010, the Community Health Insurance Scheme (CHIS), a partnership involving SPDC, the Rivers State government, and local communities, has positively impacted over 98,000 individuals. In 2023, an additional 5,900 people enrolled in the programme, which provides coverage for both primary and secondary care services.
In 2023, over 2,500 babies were safely delivered to the Obio Cottage Hospital, a specialist maternal and pediatric hospital. More than 40,000 safe births have been recorded since the launch of CHIS at the hospital in 2010, and the hospital is now self-sustaining.
Furthermore, the Shell-funded Oloibiri Health Programme (OHP) has enabled the accreditation of the School of Health Technology for the training and empowerment of healthcare workers in Bayelsa State. The communities’ use of the OHP has tripled in Ogbia, with safe deliveries of babies increasing from 433 per month to 608 at the General Hospital Kolo and Oloibiri Primary Health Centre. The management of the OHP has now transferred to an Indigenous organization, the Oloibiri Health Programme Limited.
“I am pleased by the work with our communities to create Host Communities Development Trusts (HCDTs), which will enable support for the communities’ development needs through a structured process. By the end of the year, an industry record 27 of the 33 HCDTs had been incorporated and funded by SPDC. During 2023, statutory contributions of $42 million were paid to HCDTs for the development of the respective communities in line with the aspirations of the Petroleum Industry Act (PIA).
“Our community health programmes have helped many Nigerians over the years. During 2023, SPDC supported 10 healthcare centers in the Niger Delta and – together with SNEPCo – funded the Health-in-Motion mobile healthcare programme, which has assisted more than one million people since its launch in 2010,” Okunbor said.
Investing in Education
Shell Companies in Nigeria have a long history of supporting education through scholarships and other initiatives.
In 2023, SPDC, SNEPCo, and SNG invested over $3 million in education programmes. More than 3,450 secondary school grants, 3,772 university grants, and 1,062 cradle-to-career scholarship grants have been awarded since 2016.
“Since the 1950s, Shell Companies in Nigeria have also supported education through scholarships and other initiatives. In 2023, SPDC, SNEPCo, and SNG invested more than $3 million in such programmes.
“SPDC completed the handover of the Centre of Excellence in Geosciences and Petroleum Engineering to the University of Benin, which will help encourage the development of technical capabilities for the future.
“Two additional educational infrastructure projects are under construction, the $10 million Geosciences Centre of Excellence for the University of Lagos and the $5 million e-library project at the Niger Delta University in Bayelsa State.
“Each of these projects contributes to a legacy of social commitment that will shape the lives of future generations of young Nigerians.
“SNG also conducted a five-day enterprise development training programme benefitting 150 individuals from Ogun State. The initiative provided guidance to youths with promising business ideas or skills, allowing participants to refine their abilities, improve business acumen, and initiate successful ventures.
“Shell Companies in Nigeria delivered a strong performance in 2023. We worked with stakeholders and communities to make a positive contribution to socio-economic development, and continued to power progress through more and cleaner energy solutions that meet the growing demands of our customers,” Okunbor added.
Indeed! Shell has made significant investments beyond its business activities in Nigeria.
Shell is Nigeria’s oldest energy company, and has a long term and continuing commitment to the country, its people and the economy. Shell is a global group of energy and petrochemicals companies with an average of 93,000 employees in more than 70 countries.
The company uses advanced technologies and take an innovative approach to help build a sustainable energy future.