14 March 2014, Lagos – Royal Dutch Shell,yesterday, said it lost about $1 billion (N160 billion) to crude oil theft and various disruptions in its oil and Liquefied Natural Gas, LNG, operations in Nigeria in its 2013 financial year.
Shell, in an update to investors on its strategy, declared that the risks associated with working in Nigeria had worsened, stating that crude theft is costing Nigeria a significantly larger amount, while security in the country is a daily challenge.
Shell’s Chief Financial Officer, Simon Henry, further stated in a conference call, that the proposed Petroleum Industry Bill, PIB, has curbed investment in the Nigerian oil sector and is hindering production.
Henry maintained that Nigeria is important for Shell because it accounts for almost 10 per cent of the company’s output and is seen as a source of future growth.
He said, “There are at least three to four different versions of the PIB and most of them have been unhelpful to supporting future investments in the country.
“Therefore, the industry at large has taken almost no significant investment decision in that six, seven-year period. So the country’s four million barrel-a-day target has effectively become actual production of less than two million barrels per day.
“The theft is very material. Figures have been quoted up to a billion dollars a month being stolen from the government, in effect, and that figure is probably accurate.”
Shell’s profit dipped by 37.96 per cent to $16.75bn (N2.68 trillion) in 2013, from a profit of $27bn (N4.32 trillion) recorded in 2012.
The company attributed the decline to an oversupply of global capacity, lower demand and the deteriorating security situation in Nigeria.
The company outlined its recovery plan, which includes a more detailed segmentation of the business into performance units, which it said would increase accountability and drive hard choices on capital allocation for selective growth, and divestment of non-strategic positions, to improve cash flow and return.
*Michael Eboh & Grace Udofia – Vanguard