Shell delays gas projects over funding constraints

. Invests $900m on local contracting, procurement

The Shell Petroleum Development Company (SPDC) may be groaning under insufficient fund to float some of its gas projects that are positioned to further reduce gas flaring in the county.

The Oil multinational, in its 2016 Facts Sheets, said “the planned start-up dates for two major gas gathering projects – Forcados Yokri Integrated Project (FYIP) and Southern Swamp Associated Gas Gathering (SSAG) Solutions have been delayed due to a lack of adequate joint-venture funding”.

Despite these challenges, Shell said gas flare reduction from its operations continued in 2015 with a 28 per cent decrease compared to 2014 and a flaring intensity reduction of 15 per cent from the previous year.

“Progress was made on several gas gathering projects, which are now at advanced stages of completion. For example, we have installed a gas-gathering plant at the Olama Station that is ready for final commissioning. The Adibawa, Escravos and Otumara Gas Gathering Projects are also at advanced stages of completion,” it stated.

However, the Shell Companies in Nigeria (SCiN) has committed about 90 per cent to local market, as it awarded about $0.9 billion to Nigerian companies on local contracting and procurement in 2015.

Managing Director SPDC and Country Chair, Shell Companies in Nigeria, Osagie Okunbor, said: “Shell and its partners believe they can make a real difference in the lives of Nigerians, and we have targeted our investments at community and enterprise development, education and health. Of course, we cannot take the place of government but we are keen to play our part in the development of a country we’ve been part of for more than 50 years.”

According to him, Shell pursued a variety of social investment projects, with particular focus on community and enterprise development, education and health.

Also, he said Shell spent a total of $195.5 million on social investments in the country, making Nigeria the largest concentration of social investment spending in the Shell Group.

Of the amount, some $145.1 million was paid to the Niger Delta Development Commission (NDDC) as required by law while another $50.4 million was directly expended in social investment projects.

Okunbor said Shell Companies in Nigeria are also actively involved in the development and utilisation of natural gas, pioneering its production and delivery to domestic consumers and export markets.

He said: “Although, the SPDC JV’s market share of domestic gas has reduced through a series of divestments since 2010, which enables Nigerian companies to play a more strategic role, Shell companies still remain a crucial part of the national gas energy mix. For example, our Afam VI power plant alone contributed 14 per cent of Nigeria’s grid-connected electricity in 2015, consolidating its achievements since first power in August 2008. Another entity, Shell Nigeria Gas (SNG), supplies natural gas to 87 industrial customers.”

Okunbor highlighted crude theft, illegal refining and insecurity as key challenges in 2015.

He added: “We are constantly monitoring the security situation in our operating areas in the Niger Delta and are taking all possible steps to ensure the safety of staff and contractors.”