WHY SHELL INVESTORS SHOULDN’T IGNORE THE ONGOING SECURITY SITUATION IN NIGERIA

WHY SHELL INVESTORS SHOULDN’T IGNORE THE ONGOING SECURITY SITUATION IN NIGERIA

Summary

Attacks on oil & gas infrastructure in Nigeria pose a serious risk to Royal Dutch Shell.

Looking at Shell’s footprint in the country.

How it has been impacted so far.

Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) is a big player in Nigeria, a country that has been dealing with increases in civil unrest and sporadic violence over the past few years, particularly from the Niger Delta Avengers group that wants a larger portion of the oil & gas tax revenue to go to the Niger Delta region. This is on top of Nigeria’s ongoing fight against the Boko Haram insurgency in the northern parts of the country. The ongoing security situation is a major risk for Shell’s Nigerian operations, especially as the Niger Delta Avengers have shown the ability to repeatedly target bottlenecks like pipelines and force a lot of output offline. Let’s dig in by first going over what’s at stake for Shell.

Shell’s Nigerian footprint

In southern Nigeria, there is a major liquefied natural gas hub at Bonny, a small city located next to the Bight of Birafra. The hub is home to Nigeria LNG Limited’s massive LNG complex which houses six trains capable of churning out 22 million metric tons of LNG per year. On top of that, the complex has the ability to export 5 million metric tons of liquefied petroleum gas (butane and propane) and condensate (natural gasoline/ultra-light sweet oil). This is supported by the ability to take in 3.5 Bcf of natural gas per day.

The Nigeria LNG venture is an integral part of Nigeria’s export economy and the bedrock of Shell’s asset base in the country as it supports associated gas production from its upstream operations.

Nigeria LNG Limited is owned by Nigeria National Petroleum Corporation (49% stake, NNPC is Nigeria’s state-owned energy firm), Shell (25.6%), Total (NYSE:TOT) (15%), and Eni (NYSE:E) (10.4%). NLNG owns all of Bonny Gas Transport Limited and NSML (NLNG Ship Management Limited), which support the export side of the equation.

Bonny Utility Company provides water and electricity for the 10,500 homes on Bonny Island. Shell has a stake in BUC through its stake in the SPDC JV, which stands for Shell Petroleum Development Company of Nigeria. BUC is 50% owned by NLNG, 30% by the SPDC JV, and 20% by Exxon Mobil Corporation (NYSE:XOM).

Callum Turcan

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Nigerians in South Africa 2028 posts

We are about democracy, human rights, public opinion, political behavior, civil rights and policy aimed at improving the human condition, with a focus on African countries.

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