PIB delay stalls Shell’s $30bn deepwater investments – SCiN Country Chair
BY Clara Nwachukwu
Shell Petroleum Development Company, SPDC, said, Thursday, that the uncertainties surrounding the passage of the Petroleum Industry Bill, PIB, were stalling its investments worth about $30 billion in two offshore deepwater projects in the country.
Country Chairman, Shell Companies in Nigeria, SCiN, Mr. Mutiu Sunmonu, at the ongoing Nigeria Oil and Gas, NOG International Conference and Exhibition, in Abuja, did not, however, identify what projects they were.
He said that Shell will rather wait for stable and better conditions before committing such huge amounts into the projects.
He said: “Deep water portends a huge opportunity. In Shell, we have two big projects we will like to do as soon as we are sure that the environment and the conditions are right, costing us about $30 billion, and I am sure it is the same with other international oil companies, because each of us has projects in the pipeline, but we are all waiting for the almighty PIB to make these decisions.
“I recall the Mexican story; it took them 50 years to recover from that loss in oil production and my worries are that we are slipping into that; even today, if we produce a modest allowance of three million barrels per day, 3mbpd, and just assume a modest decline rate of 10 per cent, that leaves us with 2.7mbpd.
“What this means is that for us to maintain that level of 3mbpd, we must produce additional 300,000bpd. It means that we need at least two deep water projects every year, and then you are talking about additional $30 billion investments every year for us to remain at that level, but that is not going to be easy.
“If we look at our onshore today, it is nowhere near the capacity we have today, most of what we have today comes from our deep offshore operations. But there is a lot more that we can get out of the onshore, but that is the place that has serious financing challenges. It is very clear in my mind that the potentials are there but turning those potentials to reality requires a lot of hard work, creative thinking and genuine value creation.”
Crude oil theft
Aside the PIB, Sunmonu said that Shell’s operations have also had to contend with crude oil theft, bunkering, insecurity and a host of others.
He urged the Federal Government to, “minimise the leakages in our operations today because we have talked about it before that crude oil theft continues to be a menace; if our country is losing 100,000bpd to 150,000bpd that is huge, some of the countries that are parading themselves as crude oil production countries today cannot even boast of 80,000bpd and if we are filtering away that much, then it calls for urgent action.
“We must minimise these leakage and I am really pleased about what the President is doing about it; he is taking it very seriously and he is doing it internally and externally.
“The other important factor is for us to make sure that the contractors that are coming to work in Nigeria have a level of stable operating environment in terms of the uncertainties around their contracts, by making sure that they get paid on time. So, the whole issue of funding becomes very important.”