By Yange Ikyaa
Shell has invested in game-changing businesses in Nigeria for over 60 years and today has interests in several companies that produce and distribute oil, gas, liquefied natural gas (LNG) and other energy products.
In the words of Osagie Okunbor, who is the country chair of Shell Companies in Nigeria, “I am immensely proud of the Shell Companies in Nigeria. The contribution we make to this country is astounding. Not only in terms of the tax revenue we generate for the nation but also in terms of what we are achieving when it comes to developing gas and increasing access to energy for Nigerians.
“We create jobs by investing in large energy projects, by awarding contracts to Nigerian businesses and by employing, training and empowering Nigerians across our businesses. We are building talent, across all our interests and, especially, in natural gas and deep-water exploration. We believe our investments will enrich many areas of the country for the future.”
The company achieves this through collaborations with government, local business partners, schools, colleges, universities, hospitals and with communities, saying also that Nigerians have the power to achieve their own prosperity, and that it wants to help them do that. It also says that its support for health services, education and entrepreneurship shows just how much it values those with whom it works, including the host communities.
“We work hard to support communities and they, in turn, engage with us and help us do better, every year,” the company said in an official document seen by Valuechain.
For example, in 2020 Shell had the lowest volume of oil spills in at least a decade. This was achieved through an effective pipeline and asset management system, and also through the hard work in forging positive relationships with surrounding communities.
This is not withstanding the fact that in the same year, COVID-19 hit Shell Companies in Nigeria in the same way as the rest of the world.
Production in Nigeria was hit by the pandemic and OPEC quota reductions imposed in response to the global economic slowdown. Output from the SPDC JV and SNEPCo in 2020 fell from the record highs of 2019 but, at around 620,000 barrels of oil equivalent per day, remained close to the 5-year average of 625,000.
This was due to their response with agility to the COVID-19 pandemic, quickly closing their offices and reducing staff on non-critical operations, including project sites, to protect staff and contractors until safety could be ensured. This helped prevent widespread infection.
Testing and new operating procedures were also put in place and activities were opened after just several weeks. However, oil and gas production, construction projects and spill site remediation activities were all impacted.
SCiN also contributed significant resources and expertise to help the communities where we operate help fight the spread of the coronavirus.
“The fact that we rallied, bounced back and produced oil and gas in line with our 5-year average speaks to the resilience and agility of our businesses and our teams. The fact that we also made a significant contribution to Nigeria’s COVID-19 response speaks of our commitment to this country.” Said the company in a 2021 note.
Shell Companies in Nigeria (SCiN) have a track record of strong production and financial performance. 2019 was a record year and 2020 remained strong despite the global health pandemic. This outcome is thanks to a deeply embedded culture of performance and empowering leaders to make faster decisions and find fit-for-purpose solutions.
The production of oil and gas by SPDC JV and SNEPCo has increased over the past five years and Shell Nigeria Gas (SNG) added another 30 industrial and commercial customers to its books. Therefore, Shell Gas B.V. and its partners took the decision to expand NLNG’s liquefied natural gas (LNG) export operations in Nigeria at the end of 2019.
Growing Portfolio
Currently, Shell is investing in a gas portfolio that will increase supply for Nigerian and international customers via an expanding network of plants, pipelines and export terminals developed with joint venture partners, the Nigerian government and communities.
Shell has interests in two gas supply operations in Nigeria. These are Nigeria LNG Limited (NLNG), with 25.6% Shell interest, and the Shell Nigeria Gas Limited (SNG), with 100% Shell interest.
Both are supplied with gas by the Shell Petroleum Development Company of Nigeria Joint Venture (SPDC JV) and the Shell Nigeria Exploration and Production Company Limited (SNEPCo).
Shell Gas B.V. and its partners took a final investment decision at the end of 2019 on a new liquefied natural gas (LNG) processing unit at NLNG. The expansion is expected to create around 12,000 jobs during construction and stimulate growth of the local oil and gas services sector. Construction is expected to take a number of years. However, once operational, the new unit, known as “Train 7”, will add around 8 million tonnes per annum of capacity to the Bonny Island LNG facility, taking the total to around 30 million tonnes per annum.
NLNG accounts for about 7% of the world’s total LNG production. Gas from the SPDC JV and SNEPCo’s Bonga deepwater field is piped to the NLNG plant on Bonny Island. Here, it is cooled to produce LNG for export to consumers in the Atlantic Basin countries, such as Spain, Italy, Turkey, Mexico and the US, as well as markets in Asia.
A survey conducted by Shell and named Shell LNG Outlook states that global demand for LNG increased to 360 million tonnes in 2020. As the world looks increasingly to lower-carbon fuels, it is expected that demand for LNG will continue to grow. Global LNG prices hit a record low early in 2020 but ended the 12-month period at a six-year high, as demand in parts of Asia recovered and winter buying increased against tightened supply.
Considerable opportunities lie in supplying Nigeria with gas. Nigeria has a population of more than 200 million and this is expected to double by 2050, so there is enormous potential within the domestic gas market. SNG boasts of being the only wholly owned gas distribution subsidiary of an international oil company in Nigeria. It is also the fastest growing domestic gas distribution company in Nigeria and is at the forefront of providing domestic gas to industrial customers and manufacturing plants in five Nigerian states.
The company markets gas within Nigeria as a more reliable and affordable alternative to liquid fuels. Its gas is used by local manufacturers to make household consumables, beverages, utensils and hardware. Notable customers or off-takers of its gas supplies include Africa’s largest plate glass factory and a number of household names. SNG says it is the only gas distribution company in Nigeria certified according to the ISO14001 international standard for an effective environmental management system.
One of the business complexes where gas is supplied by SGN is the Ariara International Market. With about 2 million traders, it is one of the largest markets in West Africa, and is renowned for its shoe-making and leather works. The open air market is located in Aba, a city in Abia State in the southeast of Nigeria.
Traders at the market have traditionally used petrol and diesel generators to power their lights and equipment but SNG is now supplying natural gas to Ariaria Market Energy Solutions Limited, the Independent Power Project (IPP) consortium that provides electricity to the market. This supply helps to create electricity for the over 4,000 businesses that operate in and around the market.
Ending Continuous Flaring
The Shell Petroleum Development Company of Nigeria joint venture (SPDC JV) has decreased routine flaring by almost 90% in Nigeria since 2002, turning an environmental problem into a source of energy for Nigerians and a financial flow for the joint venture and the Nigerian government.
Remaining sites with low-volume flares are in remote areas of Nigeria and the SPDC JV has been working with the federal government and other partners to develop small-scale projects to capture the associated gas for local use. Since 2000, all new SPDC JV facilities are designed to have no continuous flaring.
Shell Companies in Nigeria (SCiN) have made a series of investments and forged partnerships over the last 20 years to capture and commercialize associated gas for domestic and export markets. Through this programme, greenhouse gas emissions have been reduced and a valuable energy source redirected to domestic and international customers.
Recent examples of gas gathering projects include the Southern Swamp Associated Gas Solutions (SSAGS) project, which was commissioned in 2019-2020, and a significant part of the Forcados Yokri gas gathering project was completed in 2021. Gas from SSAGS and Forcados is meant for domestic use and export as liquefied natural gas (LNG).
As a signatory to the World Bank’s “Zero Routine Flaring by 2030” initiative, Shell continues to pursue its 2015 commitment to eliminate associated gas flaring from its operations around the world, including Nigeria.
Deep-Water Production Exceeds Expectations
Today, nearly one-third of Nigeria’s deep-water production comes from the Bonga and Erha fields. Shell Nigeria Exploration and Production Company Limited (SNEPCo), with 100% Shell interest, pioneered deep-water oil and gas production from the Bonga field in the Gulf of Guinea, where depths reach more than 1,000 metres.
Since production began in 2005, Bonga alone has produced more than 900 million barrels of oil. In 2020, the availability of the floating production, storage and offloading (FPSO) vessel fell to 70% from 94% in 2019 due to OPEC quota restrictions. For the same reason, SNEPCo’s production in 2020 fell to 118,000 barrels of oil per day from 164,000 barrels in 2019.
SNEPCo has interests in four deep-water blocks, two of which it operates. The company develops and deploys the latest deepwater drilling techniques to reduce drilling times, cut costs and increase production. The Bonga FPSO vessel has a total production capacity of 225,000 barrels of oil per day and 150 million standard cubic feet of gas export per day.
SNEPCo usually contributes around 20% to Shell’s global deep-water oil production and its growth ambitions include expansion of natural gas production. In addition to Bonga, SNEPCo’s exploration activities have led to several significant discoveries of oil and gas over the last two decades, including Bolia and Doro fields (55% Shell interest).
“It’s incredible,” says Elohor Aiboni, the current Managing Director of the company when she was Bonga asset operations manager, describing the active rig over the south-western portion of the Bonga field, where SNEPCo operates.
The secret to the company’s success is its deployment of the latest proven technology when it comes to exploring and developing the oil and gas fields in the deep waters of the Gulf of Guinea. This 7th generation, twin-decked rig cuts drilling times and costs and was the first in the world to perform a well drilling completion operation in a single trip rather than several.
The operation, completed in 2019, entailed placing valves and delicate instruments in the well. Also on the Bonga field is an FPSO with the height of a 12-storey building and spanning an area the size of three football fields.
Building Partnerships for Successful Remediation
Shell has implemented recommendations by the Niger Delta Panel of the International Union for the Conservation of Nature (IUCN) and is now improving things through continued partnership with IUCN.
“Together, we’ve done some pilot trials. We have approval from the regulators to implement a risk-based approach on the remediation of oil spills sites,” said Chinyere Ozumba, who is the biodiversity and conservation specialist for SPDC JV.
The company is now asking the international and Nigerian remediation and conservation experts to give independent assessments of biodiversity recovery at remediated sites.
Ozumba explained further that “in the beginning, I felt the experts should be able to discuss the work without SPDC JV representatives. But I soon realized that the experts didn’t fully understand the terrain and weren’t always aware of the security risks.
“When we go out into the field, we have to get security clearance, we have to take escorts and we cannot be out at night. Sometimes, when the tides are wrong or there are floods, we can’t get there. This meant we weren’t getting enough time to do monitoring. Now, we have trained locals do some of the monitoring, take photographs and get observations at night.”
There is also a partnership with Nigerian NGOs and Nigerian scientists on the ground, with conversations and partnerships in order to build a holistic remediation process.
With a view to achieving success, SCiN invest in people with strong technical and leadership capabilities, giving them the tools and accountability to deliver, directly employing around 2,700 people and more than 9,000 contractors in Nigeria. The majority of Shell’s staff, about 97%, are local Nigerians, with some of them working outside the country and sharing their expertise with their colleagues in Shell’s operations around the world.
SCiN also believe in developing Nigeria’s talent of the future, as Shell Petroleum Development Company of Nigeria joint venture SPDC JV and SNEPCo fund secondary and tertiary education scholarships. These scholarships have provided opportunities to thousands of Nigerian children in a country where demand for schooling far exceeds supply. They also invest in affordable and accessible healthcare to help improve the well-being of the communities where they operate.
In December 2021, Nigeria’s Tertiary Education Trust Fund (TETFFund) described the consistent contributions of Shell Nigeria Exploration and Production Company (SNEPCo) to education in Nigeria as exemplary and worthy of emulation by other corporates.
The executive secretary of TETFund, Prof. Suleiman Elias Bogoro, and the chairman of the board of trustees, Kashim Ibrahim Imam, both gave the commendation at an event in Abuja to commemorate the 10th anniversary of the federal government agency, which was established in 2011 to disburse, manage, and monitor education tax to government-owned tertiary institutions in Nigeria.
At the occasion, SNEPCo was presented an award of recognition for consistent contributions towards the growth of the public tertiary education sector.
Apart from its many contributions to the Nigerian economy through income generation for government, payment of taxes and other statutory levies, SNEPCo implements social investment projects across the country with a focus on education and health.
SNEPCo’s National University Scholarship, delivered in conjunction with the Nigerian National Petroleum Company, has supported over 490 Nigerian students since the programme was launched in 2016, while SNEPCo’s Postgraduate Scholarship Programme introduced in 2017 has continued to provide opportunities for qualified students from any Nigerian state to obtain a master’s degree in oil and gas-related disciplines from leading universities in the United Kingdom.
Back home in September 2021, Shell donated multimillion naira laboratory equipment and software packages to the Offshore Technology Institute of the University of Port Harcourt as part of the company’s Nigerian content human capital development programme, in collaboration with the Nigerian National Petroleum Company (NNPC).
Valued at over $700,000, the donation of the facilities was in compliance with the human capacity development guidelines of the Nigerian Content Development and Monitoring Board (NCDMB).
“The donations are aimed at strengthening advanced practical teaching and research in subsea engineering to give the students the required skills and competences for entry level jobs in the oil and gas industry,” said the managing director, Shell Nigeria Exploration and Production Company Limited (SNEPCo), Mrs. Elohor Aiboni.
Also in the same month of September 2021, Shell commissioned a 220-capacity set of auditoriums, eight lecture rooms, one e-classroom and 14 staff offices, forming part of the many projects that SPDC JV planned for Nigerian Maritime University, Okerenkoko, Delta State.
The three-year-old specialized institution, was set up in response to the needs of the information and technology revolution in the global maritime industry.
Delta State governor, Dr. Ifeanyi Okowa, said that ‘infrastructure such as what Shell and its partners have provided and still plan to provide forms the bedrock of meaningful learning, teaching and research that can stand our institutions out in global ranking, while helping the university to overcome the chronic shortage in infrastructure.”
Furthermore, 117 young entrepreneurs from the Niger Delta graduated from the Shell Nigeria LiveWIRE programme in August 2021 and were awarded a total of N48 million in grants to either establish or expand their businesses. This feat brought to 7,913 the total number of beneficiaries of the Youth Enterprise Development Programme since its inception in 2003.
Before the N48 million business incubation support, Shell had previously in August 2021 inaugurated a multi-billion-naira Rivers Cassava Processing Company Limited, built in partnership with the Rivers State Government, Vieux Manioc BV of the Netherlands, and the embassy of The Netherlands in Nigeria.
Due to its commitment to supporting host communities achieve their dreams of a prosperous life, the Governor of Imo State, Senator Hope Uzodinma, commended Shell Petroleum Development Company’s (SPDC) commitment to the development of infrastructure and human capital in communities hosting the Assa North Gas Development Project in the state.
The Governor also endorsed the gas project’s Cluster Development Board’s (CDB) employment of community contractors, with over N360 million social investment projects designed to benefit people of the host communities.
“I commend the Assa North and Ohaji Egbema Cluster Development Boards as well as their community contractors for doing good jobs so far. The Imo State Government will continue to monitor project execution to ensure that contractors do not lower the quality and standard of the jobs. We will have zero tolerance for corruption,” he said.
