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Shell targets $3 billion investment in domestic gas

Monday, 06 June 2011 00:00 Olusola Bello

Shell Petroleum Development Company (SPDC) is committing over $3 billion to domestic gas projects which will help boost economic growth in the country and end gas flaring. Specifically, the gas from the projects will provide feed stocks to the power and fertiliser plants and is expected to boost power generation in the country.

Mutiu Sunmonu, chairman, Shell Group of Companies in Nigeria and also managing director of Shell Petroleum Development Company, who confirmed this to BusinessDay, observed that the company’s gas gathering project had suffered significantly in the last four to five years due to insecurity in the Niger Delta and funding challenges on the part of the Federal Government.

However, according to Sunmonu, in the last one or two years, the government has improved its funding on domestic gas related projects while peace has also returned to the region.

“Because of these, the company is embarking on gas projects in addition to what has been done in the past. Over $3 billion has been spent in the past, and is again committing about $2 to $3 billion to the projects.”

Sunmonu assured that Shell is determined to go on with most of its plans for the future and to raise its production volume in Nigeria and ensure that it continues to meet all of its obligations to its customers. This, he added, is subject to sustaining the peace in the Niger Delta.
The Shell boss who stated that by the time all these projects are completed, the company will have covered over 90 percent of the gas projects, would however not be categorical on when Shell will end gas flaring, which he insisted is linked to issues of funding and insecurity in Niger Delta.

As part of efforts to end gas flaring by 2013, the Federal Government last week entered into a gas purchase agreement with some oil companies to provide gas to some of the power plants.

The signing of the agreement between the Federal Government and international oil companies (IOCs) has guaranteed 70 percent supply of total power sector gas requirements to the country.

Meanwhile, the gas supply agreement negotiations between Chevron joint venture and Nigarjura fertiliser company has also been finalised to pave the way for the take off of the fertiliser project, while the Nigerian National Petroleum Corporation (NNPC), Chevron, Xenel of Saudi Arabia are currently in Houston, Texas to take a look at the conceptual engineering options for the petrochemical and central processing facility.

SPDC, it is expected, would supply 90 million standard cubic feet of gas to Egbin which would translate to improved electricity supply in the country.

Meanwhile, the chief executive of officer, Shell International, Peter Voser, has said the operations of Shell companies in Nigeria remain an important part of the portfolio and as such, they (Shell) are determined to keep improving their business here.

Voser, who spoke in an interview, said, “Over the past years, we’ve seen good progress in security and increased production,” adding that, he feels encouraged by the support the Shell companies in Nigeria get from Niger Delta people and from people outside Shell who have actually been there. This, he said, has convinced him that (Shell) they are on the right track.

“But Nigeria, especially the Niger Delta, remains a challenging operational environment. We must continue to tell the story honestly. The Shell Petroleum Development Company of Nigeria Limited (SPDC) calculates that 98 percent of the oil spills in Nigeria in 2009 involving the joint venture it operates were due to sabotage and theft damage. Whatever the cause of the spill, SPDC is cleaning up the sites that it can access. But it can only do so if it’s safe for its people and they’re allowed in by the local communities.”

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