A Review of the Nigerian Energy Industry

SPDC eyes security with FID on $3.9bn project

Mutiu Sunmonu, MD, SPDC

22 June 2013, Newswires – The Shell Petroleum Development Company of Nigeria, SPDC, has formally decided to invest around $3.9 billion into a pair of infrastructure projects in the country that it hopes will help secure energy supplies in an area known for theft and sabotage.

The Shell-led venture with the Nigerian National Petroleum Corporation, NNPC, plans to spend about $1.5 billion on a “bundle” of upgrades to the 180,000-barrel-per-day Trans Niger Pipeline, sections of which have been hit hard by saboteurs in recent years.

The new loop-line design includes improvements to better protect the pipeline against crude theft and sabotage. The upgrades are also intended to help reduce pollution related to criminal activity, SPDC said.

The joint venture also plans to spend around $2.4 billion on the second phase of the Gbaran-Ubie project, which consists of five gas supply and infrastructure projects related to the Nigeria LNG plant and the Gbaran-Ubie domestic power plant.

Expected peak production from these projects is 215,000 barrels of oil equivalent per day.

“These investments will help to secure energy supplies for domestic and international markets,” SPDC managing director Mutiu Sunmonu said in a statement. “The TNPL project demonstrates the tangible steps SPDC and its partners are taking to tackle the scourge of criminal activity – pipeline sabotage and crude theft in the Niger Delta, which is the cause of so much environmental and economic damage in this region.”

The joint venture also said it plans to launch a strategic review of its interests in some onshore leases, including a potential exit from leases in the Eastern part of the Niger Delta.

The SPDC JV produced around 750,000 boepd of in 2012 from 28 Oil Mining Licenses, OMLs, across the Niger Delta, both onshore and in the near offshore.

It has been selectively divesting parts of its onshore portfolio, concentrating the operating footprint on a smaller, more contiguous area.

Since 2010, SPDC has sold its interest in eight OMLs for a total of $1.8 billion.

The venture is 30% owned by Shell, with NNPC on 55%, Total of France on 10% and NAOC on 5%.

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