Wednesday, July 29, 2009

Nigeria Loses $6 Billion in Oil Revenue to Shell Output Shut-ins

Nigeria loses $6 billion in oil revenue to Shell output shut-ins

Lagos (Platts)
29 Jul 2009

OPEC member Nigeria has lost about Naira 7 trillion ($6 billion) in oil revenues to the production shut-ins by Anglo-Dutch major Shell in the past three years due to attacks on the company's facilities by Niger Delta militants, local media reported Wednesday.

Mutiu Sunmonu, MD of Shell Petroleum Development Company, disclosed the losses at the ongoing Senate public hearing on the draft petroleum bill in Abuja, according to the Nigerian Compass newspaper reports.

Shell, Nigeria's biggest oil producer, was producing around 1 million b/d as at end-2005 before militant groups in the Niger Delta launched their violent campaign in early 2006 against Nigeria's oil industry to gain control of the region's oil wealth.

Sunmonu told the Senate that SPDC's onshore oil joint venture was
producing at less than 30% of capacity due to the unrest in the Niger Delta and funding problems, the newspaper reported.

Following the output losses, Shell declared force majeure on oil loadings from both the Bonny and Forcados export terminals.

The public hearing on the petroleum bill, which began on Monday, provided oil industry operators in Nigeria an opportunity to present their views on the legislation that would impact significantly on their operations in the West African country.

The proposed legislation would restructure state-run Nigerian National Petroleum Corp--which operates joint ventures with the foreign oil companies--into a profit-driven company. In its present draft, the legislation would allow the government to renegotiate old contracts, impose higher fees on oil companies and retake acreage that private companies have failed to explore.

Industry operators complain that although the companies backed the reform plans necessary to boost Nigeria's oil and gas reserves, they had not been consulted in the drafting of the bill.

The head of Shell companies in Nigeria, Basil Omiyi, said at the hearing on Tuesday, during a presentation on behalf of foreign oil companies operating in Nigeria, that the industry needed more time to present economic analysis which should be taken into consideration.

Similar stories appear in Platts Oilgram News.
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