Shell Petroleum Development Company (SPDC) has said it lost nearly S1 billion through theft and various disruptions to its Nigeria oil and liquefied natural gas (LNG) operations in 2013 adding that rampant oil theft is costing Nigeria even more.
The company, while updating investors on its strategy, also said that proposed Petroleum Industry Bill (PIB) had curbed investment, hindering production, while security is a daily challenge.
In its recent published annual report obtained by Blueprint, Nigeria is important to Shell because it provides almost 10 per cent of the company’s output and is seen as source of future growth but regretted that some risks of working in Nigeria had worsened.
The Nigerian Petroleum Industry Bill (PIB), a piece of legislation that has been a subject of public discourse has not been passed but it could change the terms for foreign oil companies in the country.
In the report, Shell’s chief financial officer Simon Henry, observed that there are three to four different versions of items in the bill some of which 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 4 million barrel-a-day target has effectively become actual production of less than 2 million bpd,” he said.
Nigeria produced about 1.9 million bpd in February 2014, and according to OPEC figures, oil theft is often associated with criminals who tap crude from pipelines for local refining. Stolen oil also leaves the country in tankers.
Shell’s Nigeria oil and gas output average 265,000 barrels of oil equivalent per day in 2013, down 100,000 bpd from 2012 and equal to about 8 per cent of total supply of 3.2 million bpd.
Shell, which is in the process of selling some onshore Nigerian oil blocks, still views Nigeria as a source of longer-term growth and would continue to invest in gas and deepwater projects.