Vandalism: Shell Nigeria’s oil output slides to 37,000bpd

29 July 2016, Abuja – The impact of the recent spate of attacks on oil and gas assets in the Niger Delta has started to reverberate across the petroleum industry, as Shell Nigeria, yesterday, disclosed that its crude oil production dropped sharply to 37,000 barrels per day in the second quarter, Q2 2016.

*Shell Chief Executive, Ben van Beurden.

*Shell Chief Executive, Ben van Beurden.

Shell in its Q2 2016 financial statement released to its investors said that production from its Nigerian subsidiary, Shell Petroleum Development Company, SPDC, dipped by 41 per cent to 37,000 barrels per day, bpd, during the period, down from the 63,000 bpd recorded in the same period of 2015, and 24 per cent lower than production in the first three months of the year.

Shell Group Chief Executive Officer, Mr. Ben van Beurden also warned that “Earnings could be further impacted if the security conditions continue to deteriorate.”

According to him, the security situation in Nigeria has impacted negatively on oil production, adding that sabotage incidents and repairs will cut its Nigerian oil and gas production by around 35,000 barrels per day of oil equivalent (boe/d) compared with the same period of 2015.

Van Beurden continued: “A further erosion of the business and operating environment in Nigeria could have a material adverse effect on us. “An erosion of our business reputation could have a material adverse effect on our brand, our ability to secure new resources and our licence to operate.”

He further noted that since many of Shell’s major projects and operations are conducted under joint venture agreements, “This could reduce our degree of control, as well as our ability to identify and manage risks.”

He however disclosed that Shell had continued success in its exploration programme with 10 discoveries and appraisals in Nigeria, and a host of other countries without giving further details. Blocks to indigenes Meanwhile, the House of Representatives has commended an indigenous firm, Belema Oil, for its massive investments in the Nigerian petroleum industry while also creating employment for the teeming youths in its area of operations.

Following the dwindling revenue from oil sales due to restiveness in the Niger Delta, Speaker of the House of Representatives, Mr. Yakubu Dogara, had recently set up an ad-hoc committee to investigate all the holders of Oil Mining Leases, OMLs, and Oil Prospecting Licenses, OPLs, in the country. This is with a view to making appropriate recommendations to the federal government.

Speaking during a visit to Belema Oil OML 55 offshore production platform in Rivers State, Chairman of the Ad-hoc committee, Mr. Gideon Gwani, said Belema Oil’s investment and performance justified the calls for more oil blocks to be awarded Niger Delta indigenes.

He said: “That’s why we are carrying out this investigation. We believe that when some of these oil blocks that were illegally acquired are relinquished, it will create an opportunity for some members of the host communities to participate in the acquisition process.

“By this, Niger Delta indigenes will have opportunity to do business with these resources in their domain and also contribute to the national economy. I believe that if we allow indigenes of Niger Delta to own some of these oil wells, we will have peace in the area and the country will witness stable economic growth.

“As a committee, we will investigate those who have not paid signature bonuses, Rents and Royalties and we shall insist that they make such payments to the Federal government.”

Acknowledging that pipeline vandalism is a serious threat to the oil industry, Gwani stated that part of their findings while carrying out this mandate is that these youths need to be engaged in meaningful employment.

According to him, “Once we can give them a means of livelihood, it can end this agitation. We must allow them to see themselves as stakeholders in the business in their environment and as well make contribution to the purse of the nation. Once we can do this, restiveness will stop.”

  • Vanguard
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