Shell'll not abandon Nigeria-Sunmonu

2010-02-11
THE PUNCH Newspaper-Martin Ayankola


The Country Chair of Shell Companies in Nigeria, Mr. Mutiu Sunmonu, has reiterated that the company is committed to continuing operations in Nigeria.

Sunmonu said the divestment from three oil blocks in Nigeria did not mean the company was leaving the country.

Speaking to journalists in Lagos on Tuesday night, Sunmonu said, ”Any suggestion that Shell has divested its assets and is exiting Nigeria is misleading and untrue. We have a long standing presence in and commitment to Nigeria, and we will continue our onshore and offshore exploration and production activities.”

Sunmonu, explaining the rationale behind the divestment in oil mining leases 4,38 and 41, said, ”Shell has a large and diversified global upstream portfolio, which we regularly review to ensure best value for the company.”

”We believe that these assets are best developed by a third party and that the divestment provides an opportunity for local companies to materially increase their participation in the hydrocarbon sector, consistent with the objectives of the Federal Government .It may also accelerate the exploration and development of the acreage. The transaction is subject to the approval of the Nigerian National Petroleum Corporation and the Federal Government.”

He, however, acknowledged that, like other oil and gas companies, the operations of Shell in Nigeria, were impacted by several factors.

“We recognise that these are challenging times in Nigeria. We are faced with security, funding and other issues that have severely cut our onshore production and increased our direct costs.

Sumonu said, “Shell takes a long time view of its business in Nigeria, and has the talent and assets to successfully consolidate its position as a leading Nigerian upstream player.”

”Shell and Nigeria have been important to each other for over 50 years and we want that relationship to continue in a sustainable way.A successful oil and gas industry is key for Nigeria to achieve its long term goals.”

He added that Shell would continue to review and optimise its global upstream portfolio including assets in Nigeria as appropriate.

Royal Dutch Shell on Wednesday hinted that it might sell more of its Nigerian assets after unveiling a 75 per cent plunge in its fourth- quarter profit.

Shell used to be the biggest international oil company in Nigeria, but with the gradual sale of its onshore assets, analysts said the company was gradually downsizing its operations in Nigeria.

The company has been the worst hit by the Niger Delta crisis, with its onshore production almost crippled by militant attacks between 2006 and now.

The company‘s Chief Executive, Mr. Peter Voser, was quoted as saying on Wednesday last week, “Nigeria is part of our total portfolio and if values are right we will always look at them and see if potential asset sales can actually give us more value than operating them ourselves.”

Voser further said, ”Cost focus is now embedded in our day-to-day operations. For 2010, we are targeting a further underlying cost reduction of at least $1bn, and a reduction of some 1,000 employees. Much of this will come from downstream and ongoing cost initiatives in the corporate functions.”

Also, the company‘s Chief Financial Officer, Mr. Henry Simon, was quoted as saying on the effects of the Niger Delta crisis on the company‘s operations, ”The onshore SPDC production, remember this is Shell‘s 30 per cent share, is 175,000 barrels per day in (the fourth quarter of) last year, down about 150,000 bpd today[Wednesday] due primarily to attacks in the last few days on flowlines.”

Shell also said it had shut down three pumping stations in Nigeria‘s Niger Delta following sabotage on a key crude pipeline. It did not say then how much output had been affected.

Traders said the attack had stopped production from the Forcados stream, which they said averaged around 150,000 bpd of production in 2009.

Attacks by militant groups on Nigeria‘s oil sector have prevented the country from producing two-thirds of its three million bpd of capacity, costing it about $1bn a month in lost revenues.

The company recently had agreed to sell its stake in three onshore oil licences in Nigeria to a consortium consisting of two local companies and France‘s Maurel & Prom.

Analysts said Shell was likely to sell onshore fields where there had been problems or those not yet producing oil, but this would not deter interest from potential buyers.

“Shell are looking at sales of smaller producing fields, those where security issues have shut in production and undeveloped blocks,” Head of Oil and Gas Research at Business Monitor International, Holly Pattenden, told Reuters.

“National companies from China and some Indian companies want to move in with the resources of the state behind them and we‘re also seeing a rise of African exploration companies,” Pattenden added.

Meanwhile, Voser said he believed world oil demand would be slow in the early part of the year as stocks were high and there was plenty of unused capacity.

The cautious outlook suggests Shell expects little immediate ahelp from the outside environment in boosting profit and follows similar comments from other industry leaders on the weak prospects for oil demand.

“My outlook for 2010, I would not call a rosy one,” Voser told a news conference. ”I think you will see the demand being sluggish going into 2010.”

He added: “Oil inventories remain at high levels, and so the outlook for the 2010 oil price is uncertain, but it is likely that the Organisation of Petroleum Exporting Countries, will be managing against a downside for some time.”

Many forecasters such as the International Energy Agency and OPEC expect world oil demand to return to global growth in 2010 as the economy recovers. However, both agencies trimmed their demand forecasts slightly in January.

 

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