WorldStage Newsonline– Shell plc has published its 2021 Sustainability Report, its 2022 Industry Associations Climate Review Update and its 2021 Payments to Governments Report with a total $4.48 billion said to have been paid as production entitlements, taxes, royalties and fees in Nigeria during the year.
The breakdown of payments made in Nigeria according to the report include; production entitlements $2,885,571,789; taxes $511,270,685; royalties $573,430,812; and fees $510,274,274.
Shell in the report said its share of production, onshore and offshore, in Nigeria was 175 thousand boe/d in 2021, compared with 223 thousand boe/d in 2020, a 21.52% decline.
The report said security issues, sabotage and crude oil theft in the Niger Delta failed to improve and remained significant challenges to our onshore operationsin 2021.
“We will monitor the situation closely and evaluate implications for the integrity of our infrastructure and the sustainability of our current operations,” the report said.
“We announced our intention to reduce our involvement in onshore oil and gas production in Nigeria, in line with our risk appetite. We are in discussion with the Nigerian government and other stakeholders on how this can be best achieved.”
The reported noted that Nigeria adopted the Petroleum Industry Act (PIA) in August 2021 which created a new regulatory framework for the industry.
“The PIA introduces significant changes, some of which require clarification during the 18-month implementation phase. We are actively engaged to ensure that our operations will comply with any new requirements,” the report said.
On onshore operation, Shell Petroleum Development Company of Nigeria Limited (SPDC) is the operator of a joint venture (JV) (Shell interest 30%) that, after the completion of the sale of its interest in OML 17 on January 15, 2021, has 16 Niger Delta onshore oil mining leases (OML).
The report confirmed that OML 11 expired when the Federal Government (FGN) denied an application of SPDC JV for renewal in 2019.
“While SPDC JV is challenging this decision in court, the FGN and SPDC JV are exploring an out-of-court solution. SPDC continues to operate OML 11 pending these discussions,” the report said.
On offshore, Shell’s deep-water activities are carried out by Shell Nigeria Exploration and Production Company Limited (SNEPCO), (Shell interest 100%). SNEPCO has interests in three deep-water blocks that are under PSC terms: the producing assets Bonga (OML 118) and Erha (OML 133) and the non-producing asset Bolia Chota (OML 135). SNEPCO operates OMLs 118 (including the Bonga field floating production, storage and offloading (FPSO) vessel, Shell interest 55%) and 135 (Bolia and Doro, Shell interest 55%) and has a 43.8% non-operating interest in OML 133 (including the Erha FPSO). In May 2021 OML 118 was renewed for 20 years.
SPDC also has three shallow-water licences (OMLs 74, 77 and 79) and a 40% interest in the non-Shell-operated Sunlink joint venture that has one shallow-water licence (OML 144).
“In 2021, the licence for the offshore oil block OPL 245 expired. Authorities are investigating our involvement in Nigerian oil block OPL 245 and the 2011 settlement of litigation pertaining to that block,” the report said.
“In our Nigerian operations, we face various risks and adverse conditions which could have a significant adverse effect on our operational performance, earnings, cash flows and financial condition. There are limitations to the extent to which we can mitigate these risks. We carry out regular portfolio assessments so we can maintain our long-term competitiveness in Nigeria.
“We support the Nigerian government’s efforts to improve the efficiency, functionality and domestic benefits of Nigeria’s oil and gas industry.
“We monitor legislative developments and the security situation. We liaise with host communities, governmental and non-governmental organizations (NGOs) to help promote peaceful and safe operations.
“We continue to be transparent about how we manage and report spills, and how we deploy oil-spill response capability and technology.
“We implement a maintenance strategy to support sustainable equipment reliability and have begun a multi-year programme to reduce routine flaring of associated gas. See “Climate change and energy transition.”
Shell has been formally reporting on sustainability-related performance for 25 years, with the aim of being transparent about activities that are important to investors, governments, and civil society. The 2021 Shell Sustainability Report outlines the progress towards many of its Powering Progress strategic ambitions, and shares related social, safety and environmental performance data.
In his introduction to the report, Shell’s Chief Executive Officer, Ben van Beurden, writes: “Our Powering Progress strategy, which we launched in 2021, sets out how Shell can play a leading role in helping the world to reduce its carbon emissions. At the heart of our strategy lies our own target to become a net-zero emissions energy business by 2050, in step with society’s progress in achieving the Paris climate goals. In this, our 25th Sustainability Report, we share how we are working towards our Powering Progress goals.”
Shell also published its 2022 Industry Associations Climate Review Update. It provides a progress update on actions that Shell has taken over the past year to address differences in climate-related positions with industry associations where the company identified misalignment. It also provides a summary of how much Shell paid to 36 associations in 2021. In addition, Shell published its 2021 Payments to Governments Report covering countries where it has exploration and production activities. This report details payments in 25 countries and was prepared in accordance with the UK’s The Reports on Payments to Governments Regulations 2014 (as amended in December 2015).
