Oil theft: Shell divests onshore assets in N’Delta

Mutiu Sunmonu, Shell MD

Mutiu Sunmonu, MD/CEO, SPDC

03 September 2013, Lagos Indications have emerged that Shell Petroleum Development Company, SPDC, has begun a fresh divestment of its onshore assets in Rivers State as part of a strategic move to disengage from land activities due to unabated sabotage of its pipelines and pervasive crude oil theft.

The activities of vandals have resulted in untold losses, which have forced the company to virtually shut down its land operations and concentrate on offshore activities. Consequently, buyers are currently being sought for the company’s onshore assets including production platforms and other facilities in Port Harcourt, Rivers State.

Shell sources told National Mirror yesterday that the process of disposing of the assets begun weeks after the Presidency gave approval for the action. The exercise, being carried out in phases, is scheduled for completion within the next 24 months.

Already, the company’s workers are being sensitised to the imperativeness of the exercise, which would lead to heavy job losses, especially in its East Area operations in Rivers State. It was gathered that the workers would be enticed with juicy disengagement packages to encourage some of them to volunteer to opt out.

The management had intimated the workers that the exercise was a belttightening measure and a necessary response to the unfriendly operational environment occasioned by unrelenting activities of the pipeline vandals and oil thieves in the region. Reliable sources in SPDC informed our correspondent yesterday that besides the colossal financial losses, the company was bothered about its reputation in view of the unending damage to the environment due to oil pollution.

It will be recalled that management of the energy giant undertook a similar exercise in its Western operations in Delta State in the aftermath of the ethnic crisis in Warri, Delta State, which culminated in the sabotage of many kilometres of its flow lines. The company subsequently disengaged from Delta State to strengthen the Port Harcourt location before the latest rounds of serial attacks on its onshore flow lines in Rivers State.

The management of the company hinted President Goodluck Jonathan about the latest moves in June and got his approval to proceed. It was gathered that the management of the oil giant had opted to concentrate efforts on offshore facilities, which is out of the reach of the oil thieves. The company’s woes assumed a worrisome dimension following the shut-in of about 430,000 barrels of crude oil per day from its onshore facilities in Rivers State due to the activities of the saboteurs.

Specifically, two major flow lines- Nembe Creek Trunkline, NCT, which evacuates most land production in Nembe fields and Trans-Niger Pipelines, TNP, with combined haulage capacity of about 300,000 bpd have been shut down since April.

One of our sources in SPDC told National Mirror yesterday that NTC alone was riddled with about 150 bunkering points. Investigation by National Mirror further revealed that the company had resolved to maintain and concentrate its efforts on offshore fleets, especially the Bonga and EA fields with combined daily crude production of 330,000 bpd and production of gas to cater for the interest of Nigeria LNG.

Our sources lamented that the eastern zone of SPDC is currently surviving on abysmal onshore production of 20,000 bpd as against 450,000 bpd before the oil thieves went on the rampage.

One of the sources said, “If you add the 20,000 bpd we (SPDC) are currently producing in the East in Port Harcourt with the 70,000bpd we are doing in the West in Warri, it means our combined onshore crude oil production in the Niger Delta is about 90,000 bpd. How can an oil multinational like SPDC survive on that? I think that the management had realised that the company’s relocation from Warri was after all counterproductive.

“With the shutdown of the Nembe Creek Trunkline and Trans-Niger Pipelines as well as other haulage lines since April, we are losing about 430,000 bpd in the East. Aside from the loss in monetary value, Shell as a reputable international corporate citizen cannot watch helplessly until these undesirable elements damage its reputation.

“The management had resolved to commence the process of selling off its onshore production platforms in Port Harcourt and it would be completed within 24 months. The management initiated the process after the Presidency authorised the action. “With the total divestment of the onshore fleets in the Niger Delta, the company is left with no option but to concentrate efforts on offshore production in Bonga and EA fields. We will also make do with gathering and sending gas to LNG. “It was a sad decision because a lot of workers would be disengaged but the management had no option”.

“The company had worked out juicy palliatives for the workers who are willing to go and I am sure that a lot of workers would be willing to because of the attractive packages already put in place by the management. But come to think of it, majority of the workers are tired of the security challenges in the region,” added the source, who craved anonymity.

SPDC Managing Director, Mr. Mutiu Sunmonu had warned on several occasions that the company’s operations were being threatened by vandals and oil thieves and called for measures to increase security in the area.

The Federal Government has estimated that the nation was losing N155 billion monthly to oil theft believed to be perpetrated by powerful cabals with links to government and the military. The Navy has blamed shortage of patrol boats for the inability to effectively police the nation’s waterways.

– Sola Adebayo, National Mirror

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