We have a 50% interest in the Badr Petroleum Company (BAPETCO), a self-operated joint venture between Shell and the Egyptian General Petroleum Corporation (EGPC). BAPETCO onshore operations are in the Western Desert where we have an interest in ten oil and gas producing concessions, as well as two exploration concessions (North East Obaiyed, North Matruh). In October 2019, we announced our intention to sell our onshore upstream assets in Egypt. In December 2019, we were awarded onshore concessions with 100% Shell interest (West El Fayum, South East Horus, South Abu Sennan) and one producing concession extension (Bed 2-17).
We have a 25% interest in the Burullus Gas Company (Burullus), a self-operated joint venture between Shell, EGPC and PETRONAS. Burullus operates the West Delta Deep Marine concession (Shell interest 50%), which supplies gas to both the domestic market and the Egyptian LNG plant (see “Integrated Gas”).
We have a 60% interest in the development rights for the Harmattan Deep discovery and in the Notus discovery offshore the Nile Delta.
We have interests in two gas-producing areas offshore the Nile Delta. We have a 40% interest in the Rashid Petroleum Company, a self- operated joint venture between Shell, EGPC and Edison, which operates the Rosetta concession (Shell interest 80%).
With effect from January 1, 2020, our interest in the offshore Nile Delta will be reported in the Integrated Gas segment. Comparative information will not be restated.
Our share of production, onshore and offshore, in Nigeria was 266 thousand boe/d in 2019, compared with 255 thousand boe/d in 2018. Security issues, sabotage and crude oil theft in the Niger Delta remained significant challenges in 2019.
The Shell Petroleum Development Company of Nigeria Limited (SPDC) is the operator of a joint venture (Shell interest 30%) that has 17 Niger Delta onshore oil mining leases (OML).
SPDC commenced litigation against the Federal Government (FGN) in the domestic court to challenge the non-renewal of OML 11. In August 2019, the Court ruled in favour of SPDC affirming that the SPDC JV has fulfilled its obligations under the law for the renewal of OML 11 and ordered the FGN to renew OML 11 for 20 years. In December 2019, the Court further refused to grant an application by the FGN to suspend the implementation of the judgement. Though the FGN has appealed the decision of the Court, SPDC continues to operate the block supported by the judgement in its favour which remains in force and unimpaired.
SPDC supplies gas to Nigeria LNG Ltd (see “Integrated Gas”) mainly through its Gbaran-Ubie and Soku projects.
In 2019, we took the FID on Soku NAG Compressor 2 and Gbaran Single Wells Hookup (Shell interest 30%).
Our main offshore deep-water activities are carried out by Shell Nigeria Exploration and Production Company Limited (SNEPCO, Shell interest 100%). SNEPCO has interests in four deep-water blocks, three of which are under PSC terms: Bonga and Erha. SNEPCO operates OMLs 118 (including the Bonga field FPSO, Shell interest 55%) and 135 (Bolia and Doro, Shell interest 55%) and has a 43.8% non-operating interest in OML133 (including the Erha FPSO). Separately, SNEPCO holds a 50% non-operating interest in oil prospecting licence (OPL) 245 (Zabazaba, Etan) under a production-sharing agreement (PSA).
Authorities in various countries are investigating our investment in Nigerian oil block OPL 245 and the 2011 settlement of litigation pertaining to that block.
SPDC also has three shallow-water licences (OMLs 74, 77 and 79) and a 40% interest in the non-Shell-operated Sunlink joint venture that has one shallow-water licence (OML 144); all four OMLs expire in 2034.
In our Nigerian operations, we face various risks and adverse conditions which could have a significant adverse effect on our operational performance, earnings, cash flows and financial condition. There are limitations to the extent to which we can mitigate these risks. We carry out regular portfolio assessments to remain a competitive player in Nigeria for the long term. We support the Nigerian government’s efforts to improve the efficiency, functionality and domestic benefits of Nigeria’s oil and gas industry, and we monitor legislative developments. We monitor the security situation and liaise with host communities, governmental and non-governmental organisations to help promote peace and safe operations. We continue to provide transparency in spills management and reporting, along with our deployment of oil-spill response capability and technology. We execute a maintenance strategy to support sustainable equipment reliability and have implemented a multi-year programme to reduce routine flaring of associated gas.
Rest of Africa
We also have interests in Algeria, Mauritania, Namibia, São Tomé and Príncipe, South Africa and Tunisia.