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Shell Invests $2 Billion to End Nigerian Gas Flaring After Project Delay

Bloomberg

By Eduard Gismatullin – Sep 27, 2010

Royal Dutch Shell Plc and partners are investing $2 billion in a program to end natural gas flaring in Nigeria, Africa’s biggest oil producer, after the projects were delayed because of funding and security problems.

Shell Petroleum Development Co. of Nigeria, or SPDC, has invested more than $3 billion since 2002 to cut flaring of gas, which is pumped together with oil, said Alice Ajeh, a Nigeria- based spokeswoman at Shell. Flaring decreased 65 percent between 2002 and 2009, partly because of lower production, she said.

“Due to security and funding issues, especially funding shortfall from our majority partner, a lot of the projects were stalled, or delayed,” Ajeh said in Shell video interview. “However, these projects are going right now, and we are happy at the pace at which they are going,” she said without saying when the flaring will end.

Attacks by armed groups in the Niger Delta, home to Nigeria’s energy industry, cut more than 28 percent of the country’s oil production between 2006 and 2009 and deterred investment. Output started to recover after a government amnesty program last year prompted thousands of fighters to disarm.

SPDC accounts for 75 percent of domestic gas supply in Nigeria. Last year, 48 companies expressed interest in ventures that will help to stop the practice of burning off gas into the air.

Once the program is completed, it “will cover more than 75 percent of SPDC’s production potential,” Ajeh said.

The Hague-based Shell, Europe’s largest oil company, holds 30 percent of SPDC; Nigeria National Petroleum Corp. holds a 55 stake; Total SA has 10 percent; and Eni SpA 5 percent.

To contact the reporter on this story: Eduard Gismatullin in London at [email protected]

To contact the editor responsible for this story: Will Kennedy at [email protected]

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