Shell Companies in Nigeria
This year I want to focus on just one topic: the massive and growing problem of oil theft and illegal refining in the Niger Delta. These activities are not new, so why single them out now? Because the scale of these activities has reached unprecedented levels. In 2009, the UN estimated that thieves were stealing around 150,000 barrels of crude oil a day from pipelines in the Niger Delta. In 2012, the Nigerian government said it believed that a significantly greater amount of oil was being stolen each day. This is costing the nation many billions of dollars a year in lost revenue.
It may never be possible to assess the exact figures, but it’s clear that a well financed and highly organised criminal enterprise exists on a phenomenal scale – a parallel industry with a supply chain to export crude oil overseas that includes loading and shipping operations. Most of the stolen oil ends up in ocean-going tankers that transport it to refineries in other parts of West Africa, Europe and beyond. Those involved – both in Nigeria and outside – mastermind this multibillion-dollar business using influence, corruption and violence to protect their interests.
There are also small-scale, makeshift refineries producing low-grade fuel for local use. These primitive operations cannot use the heavier parts of the crude, which is dumped, destroying the mangroves and riverside areas where these activities take place.
It’s also impossible to know how much of the stolen oil is spilled once it is taken from SPDC facilities. But we can estimate that 26,000 barrels of oil were spilled in the area immediately surrounding our pipelines and other facilities in 2012, of which around 95% was the result of sabotage and oil theft. Over the last three years, we estimate that these criminal acts accounted for around 85% of the volume of oil spilled from SPDC facilities. The scale of the problem puts enormous strain on our staff, diverting time and resources to tackle the environmental consequences. It can also place our staff in danger. Two contractors working for SPDC were tragically killed in 2012 in an armed attack while assessing the remediation of an oil-spill site.
Where possible, we are taking steps to make it more difficult for the thieves to tap into and steal oil from our pipelines. But preventing theft still depends on the prompt response of government security agencies. Over the last year, SPDC has shut down production on a number of occasions to make repairs to damaged pipelines. But no sooner do we work on one area, than the thieves shift their focus elsewhere.
Stemming and reversing this menace requires co-ordinated action, both at the national and local level inside Nigeria, and at a regional and international level outside Nigeria. We urgently need more assistance from the Nigerian government and its security forces, other governments and other organisations. Better security, collection of evidence and law enforcement are required on the ground; as well as international action to trace, track and apprehend the international networks trading in stolen crude.
The government’s security forces have stepped up their efforts, but they need more dedicated resources and logistical support to combat oil theft now that it has assumed such an international dimension. Greater efforts are required to boost economic development in the Delta to provide alternative livelihoods for those involved. And Nigeria needs to do more to encourage investment in the power sector to ensure reliable electricity supplies to reduce demand for illegally refined local diesel.
SPDC has made great efforts to raise awareness of the issue with the government of Nigeria, international bodies like the UN, with civil society and with the media. Tackling oil theft and its causes is in the interests of the industry, the government, the environment and – most importantly – the people of the Niger Delta. We will continue to be at the forefront of discussions to find lasting solutions.
SHELL’S ECONOMIC CONTRIBUTION
The Shell Petroleum Development Company of Nigeria Ltd (SPDC) is the operator of a joint venture between the government-owned Nigerian National Petroleum Corporation (NNPC, 55%), Shell (30%), Total (10%) and Agip (5%). Shell Nigeria Exploration & Production Company (SNEPCo, 100% Shell-owned) operates and has a 55% interest in the offshore Bonga field, Nigeria’s first deep-water project. Shell also has a 26% interest in Nigeria Liquefied Natural Gas (NLNG), which exports LNG around the world.
- $42 billion: revenues from SPDC to Nigerian government from 2008 to 2012.
- $5.2 billion: Shell share of royalties and taxes paid to the Nigerian government in 2012 (SPDC $3.4 billion, SNEPCo $1.8 billion).
- 95%: Share of revenue after costs that goes to the Nigerian government from each barrel of oil SPDC produces.
- $2.4 billion: value of SPDC and SNEPCo contracts awarded to Nigerian companies in 2012.
- 4,000/30,000: estimated direct and indirect jobs created by SPDC and SNEPCo in Nigeria.
- Over 90%: proportion of employees who are Nigerian.
- $178.3 million: SPDC and SNEPCo funds to the Niger Delta Development Commission in 2012 (Shell share $68.2 million).
- $103.2 million: 2012 contribution from SPDC and SNEPCo to community development projects (Shell share $31.4 million).