By Sonny Atumah
President Muhammadu Buhari during the week visited the Netherlands. He may have been enthusiastic as he visited the home of global oil giants Royal Dutch Shell. His four-day visit to the Netherlands would have been one of the eventful periods in the last three years of his political reincarnation that he had sought cooperation and collaboration with friendly nations. Perhaps the Netherlands would have been his starting point based on petroleum historical ties of both nations.
He did not miss the opportunity in his itinerary to the International Criminal Court, ICC 20th anniversary celebration to consummate deals in petroleum. The Managing Director of NNPC, Maikanti Baru said that Buhari’s meetings with Dutch CEOs including Shell’s CEO, Ben Van Beurden have shown that they have a lot of confidence in the Nigerian economy.
On April 18, 2018, President Buhari could not contain his excitement while discussing the ease of doing business at the Commonwealth Business Forum of the Commonwealth Heads of Government Meeting, CHOGM in London. As a panelist he broke the news that the Shell Group promised a US$15 billion investment in his country when Shell met with him shortly before that event.
The good opportunities in Nigeria would have elicited a final investment decision for capital expenditure (capex) in the Bonga offshore oil field and expansion in the liquefied natural gas by Shell. With the Bonga South West deal now approved a large chunk of Shell’s annual capex may be committed to add about 225,000 barrels of crude oil per day to Nigeria’s production base.
Shell in Nigeria, founded in 1936 as Shell D’Arcy started business when an exploration licence was granted in 1937. It has grown and developed after it discovered the first commercial oil field at Oloibiri in present day Bayelsa State. Shell started oil exports from Oloibiri Well No 1 in February 1958. Many have x-rayed Shell and asked questions that bother on renewed commitment to the Nigerian project.
With introspection have we done well in areas of downstream investments, transparency, accountability, pollution management and corporate social responsibility? Shell may not be absolved of the myriad of agitations by host communities of operation in the Niger Delta region. As the President toured the Port of Rotterdam Shell refinery in Pernis, it was time Nigeria evaluated her relationship with Shell.
This vertically integrated oil company is the second biggest public traded oil Company and the largest producer of liquefied natural gas in the world. The petroleum company of Dutch and British origins is one of the six oil super majors in the business of exploration and production, processing, transportation and marketing of hydrocarbons.
The company’s headquarters are in The Hague, Netherlands, with its registered office in London (Shell Centre). Shell’s 416,000 barrel per day Pernis refinery is the largest oil refinery in Europe and one of the largest refineries in the world. Shell Pernis is a large and important complex at the Rotterdam World Port. It should be underscored that the Netherlands is a non-producing consumer nation. A non-producing consumer nation is that which oil production is 10 percent or less of her consumption.
Again, Rotterdam is the largest port in Europe and the fourth busiest port in the world after Shanghai, Singapore and Hong Kong. Rotterdam ie one of the world’s busiest ports for bunkering activity along with Singapore. The Amsterdam-Rotterdam-Antwerp (ARA) set of ports make up the most important hub for maritime activity in northern Europe and form a key component of the European oil supply chain. Most Nigeria ports along the Atlantic coastline are not strong in merchant shipping. Apart from the Lagos ports, Calabar and Onne others in Port Harcourt, Warri, Burutu, Sapele, Koko and petroleum terminals in Escravos and Forcados survive on captive cargo; not generating their own cargoes.
President Buhari’s visit might have been an eye opener as to what downstream investment could do to an economy. No doubt Shell Companies is major contributor in producing energy, generating revenues and developing local content for Nigeria. But why has Shell not been part of Nigeria’s refining architectonics? Shell has interests in 35 refineries globally with a refining capacity of 4 million barrels of crude per day. Shell has 40 percent refining portfolio in Europe and Africa, 30 percent in the Americas and 30 percent in the Asia Pacific region.
Analysts believe the illegal acquisition of equities of oil companies without buyouts should be revisited to allow unhindered participation in the downstream. The first Port Harcourt refinery built by Shell was a casualty as Nigeria joined OPEC in 1971. Again, the downstream facilities of Shell and BP were nationalised in 1978 to fight the obnoxious apartheid regime in South Africa. It behoves our petroleum resources managers to do a national soul searching on why at 60 years of exporting crude oil we still gauge our ability to fund our budgets on the mood of crude oil prices. Legal and regulatory frameworks, transparency and accountability, as well as the ease of doing business need to be entrenched in the oil sector in Nigeria.