Royal Dutch Shell has admitted the operations of its Nigerian subsidiary are not compatible with the company’s energy transition strategy, despite a 40 percent drop in oil spills caused by sabotage in Nigeria’s oil-rich Delta.
Shell is the operator of Nigeria’s main onshore oil and gas joint venture Shell Petroleum Development Company (SPDC) which has struggled for years to contain spills in the Delta caused due to operational incidents, theft and sabotage.
“The balance of risks and rewards associated with our onshore portfolio is no longer compatible with our strategic ambitions,” Chief Executive Officer Ben van Beurden told investors at Shell’s annual general meeting on Tuesday.
Shell’s volume of crude oil spills caused by sabotage in Nigeria’s oil-rich Delta dropped by 40percent in 2020 to 1,400 tonnes while the total number of major spills caused by theft and sabotage also dropped to 122 incidents in 2020 from 156 incidents the previous year
Read Also: Shell’s onshore oil divestment will test local operators’ capacity
“We cannot solve community problems in the Niger Delta and the company has started discussions with the government on how to move forward,” he said.
At the AGM meeting, Shell’s shareholders overwhelmingly supported the company’s energy transition strategy, but rising backing for a second climate resolution filed by an activist group pointed to growing pressure to tackle climate change.
A non-binding resolution submitted by Shell with the support of a large group of investors to vote on its recently unveiled climate strategy won 88.74% shareholder support at its annual general meeting (AGM) which was held online.
The plan announced in February aims to reduce planet-warming carbon emissions to net-zero by 2050 by slowly reducing oil and gas output, growing its renewables and low-carbon business and offsetting emissions through carbon-capturing technologies and measures such as forestation.
According to Bloomberg, Van Beurden didn’t say explicitly that Shell wants to sell the remainder of its oil assets in the Niger Delta, nor did he provide a timetable. Yet a full retreat would be an obvious endpoint to years of gradual divestment.
Shell has reduced its total number of onshore licenses in Nigeria by half over the past decade.
In February, Heirs Holdings, in partnership with Transnational Corporation of Nigeria Plc through TNOG Oil and Gas Limited acquired a 45 percent participating interest in OML 17.
The acquisition from the Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and ENI was described as one of the largest oil and gas financing in Africa in more than a decade, with a financing component of $1.1 billion, provided by a consortium of global and regional banks and investors.
The recent sales were also part of a broader retreat by international oil companies from Nigerian oil and gas fields that have been plagued by pipeline theft as well as uncertainty over the West African country’s tax regime.
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