ROYAL Dutch Shell lost about $1 billion (N160 billion) to crude oil
theft and various disruptions to its Nigerian oil and liquefied natural
gas operations in 2013.
Indeed, Shell’s share of production, onshore and offshore, in Nigeria decreased to 265 thousand bpd in 2013, compared with approximately 365 thousand bpd in 2012.
The company, which made this disclosure in its yearly report for 2013, said that security issues and crude oil theft in the Niger Delta continued to be the company’s significant challenges in the year under review.
The company said that it produced 3.2 million barrels of oil equivalent a day (bpd) in 2013. “Sales of liquefied natural gas (LNG) totalled 19.6 million tonnes. Both were lower than the previous year, mainly due to the difficult operating environment in Nigeria”.
It added that proposed Nigerian legislation had curbed investment, hindering production and described security as a daily challenge.
Shell said that some risks of working in Nigeria had worsened. "There are at least three to four different versions of it and most of them have been unhelpful to supporting future investments in the country.
"Therefore, the industry at large has taken almost no significant investment decision in that six, seven-year period. So, the country's four million barrel-a-day target has effectively become actual production of less than two million bpd.
“For Shell, 2013 proved to be a challenging year, in part due to a complex and difficult operating environment. We faced a deteriorating security situation in Nigeria. In downstream, refining margins in Asia and Europe were depressed by an oversupply of global refining capacity and lower demand.
“There were also areas where we as a company could have been more competitive, including our day-to-day operational performance and our capital efficiency. Some of our businesses demonstrated outstanding operational and financial performance. The reality, however, is that several operated below their full potential in 2013. Our overall performance was frankly not what I expect from Shell”.
Despite disappointing financial results not withstanding, Shell said that 2013 was also a year in which it laid firm foundations for the future, bringing projects to fruition that will underpin our ability to deliver increasing cash flow through economic cycles and competitive returns including a growing dividend.
It disclosed that the company would strive to build on its track record of delivering new projects in 2014.
It stated: “We will continue to use a clear set of strategic themes to guide decisions about investment and technology. To recap, we have our upstream and downstream “engines”. These are mature businesses that generate the bulk of our cash flow. Then there are our growth priorities, integrated gas and deep water. These play to our strengths in technology, and will afford significant opportunities in the years ahead.
“Finally, we have opportunities for the longer-term, including gas and oil in tight rock and shale, heavy oil, and in the Arctic, Iraq, Kazakhstan, and Nigeria.
“In 2013, we made strong progress against many of these strategic priorities. In total, we took nine final investment decisions on large projects across all areas of our business during the year.
“We also delivered several important new projects. In Downstream, for example, we took further steps to meet growing long-term demand for chemical and lubricant products in Asia’s growth markets. In China, we opened a grease manufacturing plant, while in Singapore we decided to expand our Jurong Island petrochemicals plant”.
Indeed, Shell’s share of production, onshore and offshore, in Nigeria decreased to 265 thousand bpd in 2013, compared with approximately 365 thousand bpd in 2012.
The company, which made this disclosure in its yearly report for 2013, said that security issues and crude oil theft in the Niger Delta continued to be the company’s significant challenges in the year under review.
The company said that it produced 3.2 million barrels of oil equivalent a day (bpd) in 2013. “Sales of liquefied natural gas (LNG) totalled 19.6 million tonnes. Both were lower than the previous year, mainly due to the difficult operating environment in Nigeria”.
It added that proposed Nigerian legislation had curbed investment, hindering production and described security as a daily challenge.
Shell said that some risks of working in Nigeria had worsened. "There are at least three to four different versions of it and most of them have been unhelpful to supporting future investments in the country.
"Therefore, the industry at large has taken almost no significant investment decision in that six, seven-year period. So, the country's four million barrel-a-day target has effectively become actual production of less than two million bpd.
“For Shell, 2013 proved to be a challenging year, in part due to a complex and difficult operating environment. We faced a deteriorating security situation in Nigeria. In downstream, refining margins in Asia and Europe were depressed by an oversupply of global refining capacity and lower demand.
“There were also areas where we as a company could have been more competitive, including our day-to-day operational performance and our capital efficiency. Some of our businesses demonstrated outstanding operational and financial performance. The reality, however, is that several operated below their full potential in 2013. Our overall performance was frankly not what I expect from Shell”.
Despite disappointing financial results not withstanding, Shell said that 2013 was also a year in which it laid firm foundations for the future, bringing projects to fruition that will underpin our ability to deliver increasing cash flow through economic cycles and competitive returns including a growing dividend.
It disclosed that the company would strive to build on its track record of delivering new projects in 2014.
It stated: “We will continue to use a clear set of strategic themes to guide decisions about investment and technology. To recap, we have our upstream and downstream “engines”. These are mature businesses that generate the bulk of our cash flow. Then there are our growth priorities, integrated gas and deep water. These play to our strengths in technology, and will afford significant opportunities in the years ahead.
“Finally, we have opportunities for the longer-term, including gas and oil in tight rock and shale, heavy oil, and in the Arctic, Iraq, Kazakhstan, and Nigeria.
“In 2013, we made strong progress against many of these strategic priorities. In total, we took nine final investment decisions on large projects across all areas of our business during the year.
“We also delivered several important new projects. In Downstream, for example, we took further steps to meet growing long-term demand for chemical and lubricant products in Asia’s growth markets. In China, we opened a grease manufacturing plant, while in Singapore we decided to expand our Jurong Island petrochemicals plant”.
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