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Nigeria: Letter from Mutiu Sunmonu

Mutiu Sunmonu was the Chairman of Shell companies in Nigeria from 2010 to 2015. Following his retirement in February, Mutiu looks back on his time in Nigeria’s oil and gas industry and gives his views on the future of the sector.

Mutiu Sunmonu (photo)
Mutiu Sunmonu
Chairman of Shell companies
in Nigeria (2010 to 2015)

When I joined Shell in the late 1970s, I entered a Nigerian oil and gas industry that was heavily dominated by the international oil companies (IOCs). Looking back after nearly 40 years the most striking development is the emergence of independent Nigerian companies across all levels of the industry. A growing number of these companies are now taking advantage of asset sales from the IOCs, to invest in, develop and in some cases, operate oil and gas fields. This is an exciting trend that bodes well for the long-term sustainability of the oil and gas industry in Nigeria.

This has not happened by accident. The IOCs and Shell, in particular, have invested in building a technically skilled workforce and contractors within Nigeria for many years. I am proud that today the Managing Directors of all the Shell Companies in Nigeria (SCiN) are Nigerians. I believe that our most important contribution has been the development of our people including engineers, project managers, leaders and entrepreneurs: 95% of Shell Petroleum Development Company of Nigeria (SPDC) and Shell Nigeria Exploration and Production Company (SNEPCo) employees are Nigerian, while 90% of SCiN contracts were awarded to Nigerian companies in 2014. This shows that our value to the economy reaches far beyond the energy we produce and the billions of dollars in royalties and tax revenues that we contribute every year.

Onshore oil divestments by SPDC have created a perception to some that Shell is leaving Nigeria. In fact, Shell Companies remain committed to maintaining the pioneering role we have played in Nigeria for more than half a century. This is clearly illustrated in the deep-water fields of the Gulf of Guinea and the gas value chain in the Niger Delta, where SNEPCo and SPDC are using advanced technology to deliver safe, economic projects that unlock Nigeria’s energy potential while providing jobs and training for local people.

Yet challenges remain for SCiN and the wider Nigerian oil and gas industry; an operating environment that remains among the most volatile in the global oil and gas industry. I would like to highlight two major challenges.

First, crude oil theft has been the defining sustainability challenge during my time as Chairman. SPDC has taken numerous measures to limit the impact of this criminality within its areas of operation. It has also raised awareness of the scale of the problem both within Nigeria and internationally. However, theft, sabotage and illegal refining continue to be the main source of environmental damage in the Niger Delta today and result in many thousands of barrels of lost production. It is vital that the current collaboration between operating companies, communities, the Nigerian government and its international partners is maintained and expanded.

Second, SCiN’s credibility as a partner of the government and host communities in Nigeria is dependent on us dealing responsibly and transparently with our environmental commitments. Our performance in preventing, responding to and cleaning up spills has improved in recent years, despite the escalation of crude oil theft and difficulties in securing community permission to access some areas.

We have also taken important steps forward to formalise the role of non-governmental organisations (NGOs) and other civil society representatives in the Joint Investigation Visits (JIVs) that follow oil spills. This has included building skills among people locally to respond to spills and help to remediate sites. (See External opinion under “Spill prevention and response”). I hope that the recent settlement of litigation relating to the deeply regrettable operational spills at Bodo in 2008 has removed a constraint towards further clean-up of the spill sites in parts of Ogoniland.

It is Shell’s goal as a global company to achieve no harm and no leaks from its operations. In Nigeria, there will be no celebrations until this goal is reached. Increased transparency will remain a crucial part of building and maintaining trust with host communities in the Niger Delta.

Our industry leading position in Nigeria local content implementation, the step change in working responsibly with host communities and the recognition we have received from local NGOs for leading the way on spills reporting and transparency are among the achievements of which I am most proud during my time as Chairman.