Shell Joint Venture Invests $3.9 Billion to Secure Nigerian Oil & Gas Supplies

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--While a joint venture led by Shell (NYSE:RDS) (The Hague, Netherlands) announced that it plans to invest $3.9 billion in new oil and gas projects in Nigeria, the company also confirmed that it has shut down the 28-inch Trans Niger pipeline. Because of oil theft incidents, it also plans to shut down the 24-inch Trans Niger pipeline. The 24-inch pipeline will reopen when security has been restored, but the 28-inch pipeline will remain closed.

The Trans-Niger moves 150,000 barrels of oil per day. It was shut down after an explosion and fire occurred at a point targeted by oil thieves.

Despite such incidents, Shell is moving forward with new projects that will maintain the country's domestic energy supplies and export capability, while reducing the problem of oil theft at the pipeline. Thefts have interrupted operations and caused severe environmental pollution.

The company said that it was planning a strategic review of its operations, which could result in the sale of some offshore oil fields. The Trans Niger Pipeline (TNPL)--a new, $1.5 billion pipeline--will be designed for protection against oil thefts, which also will help to reduce pollution. Onshore oil and gas leases in the eastern part of the Niger Delta also will be reviewed.

Five gas projects, known as Gbaran-Ubie Phase II, will involve an investment of $2.4 billion. They will supply power stations and the Nigeria LNG export project.

Shell Petroleum Development Company of Nigeria Limited is a joint venture with state-owned Nigeria National Petroleum Corporation and the local units of Total (NYSE:TOT) (Paris, France) and Eni (NYSE:E) (Rome, Italy).

For related information, see May 14, 2013, article - Oil Pipeline Supply Chain Breached by Major Theft in Africa, India, and January 22, 2013, article - Nigerian Union Calls for Action After Pipeline Vandals Cause $1.05 Billion in Losses in Four Years.

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