Oil
Oil theft putting ‘enormous strain on Shell Nigeria staff’ – MD
LAGOS – The rising incidences of oil theft in Nigeria’s oil producing Niger Delta is putting enormous strain on Shell Nigeria staff, as well as costing the country billions of dollars a year in lost revenue, the Royal Dutch Shell said Thursday.
The rising incidences of theft also come at a significant environmental cost, the company added.
In its sustainability report, the Anglo-Dutch oil major said its Nigerian unit, Shell Petroleum Development Company, or SPDC, experienced 137 spills as a result of sabotage and theft last year, with the volume of oil lost amounting to 3.3 thousand tons.
“This was an increase in both volume and numbers from 2011, as the scale of oil theft in Nigeria reached unprecedented levels,” it said in the report.
In an open letter published in the report, SPDC’s managing director, Mutiu Sunmonu, said the problem of oil theft in the Niger Delta has reached “unprecedented levels” and puts enormous strain on the company’s staff, as well as costing Nigeria the country billions of dollars a year in lost revenue.
He added that the Nigerian government puts the volume of oil stolen significantly above the 150,000 barrel a day estimate given by the United Nations in 2009.
“It may never be possible to assess the exact figures, but it’s clear that a well financed and highly organised criminal enterprise exists on a phenomenal scale…most of the stolen oil ends up in ocean-going tankers that transport it to refineries in other parts of West Africa, Europe and beyond,” Mr. Sunmonu said.
“Where possible, we are taking steps to make it more difficult for the thieves to tap into and steal oil from our pipelines,” Mr. Sunmonu said, without providing details.
However, disruptions remain significant. Onshore production from SPDC’s facilities were 20% below capacity last year as a result of pipeline shut downs related to oil theft, the report said and last month SPDC said it would have to shut its 150,000 barrel a day Nembe Creek oil pipeline in order to clear illegal oil ‘tapping’.
In its report, Shell called on the Nigerian and international governments and local communities to take steps to stop oil theft in the Niger Delta.
“We urgently need more assistance from the Nigerian government and its security forces, other governments and other organisations,” Mr. Sunmonu said.
In contrast to the growing incidence of theft, Shell said it improved its record in terms of operational spills in Nigeria last year. The company said it experienced just 36 operational spills in 2012, down 40% from the year before, while the volume of oil spilled more than halved to 0.2 thousand tons.
According to its report, SPDC has replaced almost 500 kilometres of pipeline in the last three years and is working to replace more of the infrastructure.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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