FG earns N9.4tn from Shell in five years

Shell Petroleum Development Company of Nigeria Limited paid to the Federal Government a total of $48bn (N9.46tn) in royalties and taxes from 2010 to 2014, Royal Dutch Shell Plc, the parent company of the SPDC, has said.

The oil major, in its ‘Sustainability Report 2014’ released on Friday, said its share of royalties and taxes paid to the government in 2014 was $3bn (SPDC, $1.8bn and Shell Nigeria Exploration and Production Company, $1.2bn).

According to the report, 95 per cent share of revenue after cost goes to the Nigerian government from each barrel of oil that the SPDC produces.

Shell said 90 per cent of its total number of contracts were awarded to local companies, adding that $1.5bn was spent by the SPDC and SNEPCo on local contracting and procurement last year.

The Chairman of Shell companies in Nigeria from 2010 to 2015, Mr. Mutiu Sunmonu, said in the report that onshore oil divestments by the SPDC had created a perception to some that Shell was leaving the country.

“In fact, Shell companies remain committed to maintaining the pioneering role we have played in Nigeria for more than half a century. This is clearly illustrated in the deep-water fields of the Gulf of Guinea and the gas value chain in the Niger Delta, where SNEPCo and SPDC are using advanced technology to deliver safe economic projects that unlock Nigeria’s energy potential, while providing jobs and training for local people,” he said.

Sunmonu, who stated that there were still challenges for Shell companies in the country, described the wider Nigerian oil and gas industry as “an operating environment that remains among the most volatile in the global oil and gas industry.”

“I would like to highlight two major challenges. First, crude oil theft has been the defining sustainability challenge during my time as chairman. The SPDC has taken numerous measures to limit the impact of this criminality within its areas of operation. It has also raised awareness of the scale of the problem both within Nigeria and internationally,” he said.

According to him, theft, sabotage and illegal refining have continued to be the main sources of environmental damage in the Niger Delta and have resulted in many thousands of barrels of lost production.

Sunmonu added, “It is vital that the current collaboration between the operating companies, communities, the Nigerian government and its international partners is maintained and expanded.

“Second, Shell companies in Nigeria’s credibility as a partner of the government and host communities in Nigeria is dependent on us dealing responsibly and transparently with our environmental commitments.”

He said the performance in preventing, responding to and cleaning up spills had improved in recent years despite the escalation of crude oil theft and difficulties in securing community permission to access some areas.

According to Sunmonu, the SPDC reduced the volume of flared gas by more than 75 per cent between 2002 and 2013 as the intensity (amount of gas flared per barrel of oil produced) fell by almost 60 per cent over the same period.

He said the company remained committed to further reducing the volume and intensity of gas flaring, with a number of associated gas-gathering projects, which are all currently in development.

Sunmonu said, “However, in 2014, an increase in levels of oil production has resulted in the volumes of flared gas increasing by 12 per cent over the year, and an increase of nine per cent in flaring intensity.

“A challenging operating environment and shortfalls in funding from the government-owned Nigerian National Petroleum Company have resulted in delays to the completion of a number of gas-gathering projects.”