Investing in the Nigerian oil and gas sector

‘Shell will continue to invest in Nigeria’

The Shell Petroleum Development Company of Nigeria (SPDC) has restated its commitment to investing in Nigeria adding that the company and its partners contributed $57.7 million directly to development projects in 2009 alone.

The Chairman of Shell Companies in Nigeria, Mr. Mutiu Sunmonu, who is also the Managing Director of SPDC of Nigeria, said Shell will continue to invest in Nigeria ‘under the right conditions.’

According to a statement issued by the company’s Corporate Media Relations Manager, Mr. Tony Okonedo, Sunmonu spoke at the Leadership lecture series of IBB Golf and Country Club, Abuja, which was held as part of activities marking Nigeria’s 50th independence anniversary, where he expressed the company’s resolve to continue to invest in Nigeria. He said Shell’s decision to continue investing in Nigeria, was not because it doesn’t have investment opportunities in other countries but because Nigeria is a strong and healthy country.

His words: “Shell will continue, under the right conditions, to invest in projects that would benefit the people. We are not doing this because we lack investment options. We are doing it because we believe in a strong and healthy nation.”

Delivering a lecture titled “Investing in the Nigerian oil and gas sector,” Sunmonu explained the scope and philosophy behind investments made by SPDC and its Joint Venture partners (NNPC, Total and Agip). SPDC, the oldest energy company in Nigeria, has developed a “long term and continuing commitment to the country, its people and the economy,” generating billions of dollars to help fund development and growth. Working with NNPC and other international oil companies, SPDC has also made big investments in the oil and gas industry.

Sunmonu cited Gbaran-Ubie integrated oil and gas development in Bayelsa State and Afam V1 power plant in Rivers State as two examples of investments that will further the development of Nigeria. Afam V1 power plant commenced electricity generation in October 2008, fed by gas from SPDC’s new Okoloma gas plant, while oil and gas production from Gbaran-Ubie began in July this year.

He said that, in addition to these investments, SPDC and its Joint Venture partners support and finance community development initiatives in the Niger Delta. In 2009 alone, SPDC and its partners contributed an additional $57.7 million directly to development projects – many delivered in partnership with others, he added.

He said: “Last month, the UN Secretary-General invited leaders of the 192 UN member nations to a summit in New York, to discuss how to help the world’s poorest people. The poor are those without a voice. They’re the ones without water, food, shelter, medicine, education. And they need help. In Nigeria, the government cannot provide all the help on its own. SPDC knows this and that’s why we place great importance on making a difference in the environment in which we operate.”

On the golden jubilee anniversary, Mr. Sunmonu said Nigeria “has reasons to celebrate.” Nigeria holds about 10 per cent of global proven oil reserves and about eight per cent of global proven natural gas reserves. But he said that, for Nigeria to continue to attract international investments, it needs to sustain confidence and stability and respect the sanctity of contracts.

“I was delighted when President Goodluck Jonathan recently launched the ‘Roadmap for the Power Sector Reform.’ The great majority of Nigerians want dramatic improvements in their quality of life, whether to have modern appliances, or simply to have electricity so students can study for a brighter future. More gas and more power will raise living standards, support sustainable economic growth and kick-start new industries.”

However, Shell recently launched a shake-up of its Nigerian operations by offering oil fields for sale in apparent response to Federal Government’s plans to pass the Petroleum Reform Bill (PIB), which seeks to impose harsher terms on International Oil Companies (IOCs).

Analysts said with Shell’s new projects in the United States’ Gulf of Mexico and Qatar near completion and the company’s souring relations with the Federal Government as a result of some controversial provisions in the PIB, the new chief executive of the oil giant, Mr. Peter Voser, was keen on reducing the company’s reliance on Nigeria.

Shell’s decision to sell some Nigerian assets was part of a company-wide shake-up.Since he assumed duties in July last year, Voser had “made 15,000 workers reapply for their jobs, re-entered Iraq and put a handful of European refineries up for sale”.