Since 2002, gas flaring from Shell Petroleum and Production Company (SPDC) facilities has fallen by over 50percent. This decline has been due to works carried out to collect the gas produced with oil, as well as lower production as a result of militants’ activities.
As security in the Niger Delta improved and production rose in 2010, the volume of gas produced and flared rose accordingly from Shell facilities. Early 2010, SPDC began work on new projects to install gas-gathering equipment at 27 gas separation facilities. This will extend the proportion of potential SPDC production where it can gather gas to over 90percent, increasing the gas available for the domestic market and for export.
Progress on these projects depends on continued stability in the Delta and funding from partners. SPDC is looking at possible solutions for the remaining gas, including supplying communities and businesses that need gas for local power generation or industrial uses.
He said SPDC supplies about 70percent of Nigeria’s domestic gas, which is mostly used to produce power. Its major new energy project at Gbaran-Ubie in Bayelsa State began to help meet this need by providing gas to generate electricity, and for export. This project has created 300 permanent jobs and helped many to develop skills such as welding and scaffolding.
A related social investment scheme is under way to connect 200,000 local people to the electricity grid for the first time. SPDC’s Afam VI power plant in Rivers State continued to contribute almost 20percent to the country’s total electricity generating capacity.
Meanwhile, the Federal Government received the sum of $31 billion from Shell petroleum Development Company (SPDC) as part of its contribution to the federal purse between 2006 and 2010 and $3.5 billion as royalty and taxes in 2010 alone.
Stating its contribution to the Nigerian economy, the company in its 2010 sustainability report, Mutiu Sunmonu, chairman of Shell Companies in Nigeria and managing director of Shell Petroleum Development Company of Nigeria Ltd (SPDC), said only concerted action by all parties will overcome the deep-rooted challenges in the Niger Delta, adding that government must lead the way.
“The best contribution SPDC can make is to grow and sustain our business in a responsible way: this will maximise revenues to the government, protect tens of thousands of jobs, provide valuable contracts to Nigerian companies, and develop industry skills,” he said.
According to the company, 95 percent of the share of revenue-after-cost goes to government from every barrel of oil that SPDC produces.
The company also claimed that contracts worth $947 million were awarded to Nigerians by it and Shell Nigerian Exploration and Production Company (SNEPCo).
While the two companies created about 6000 and 35,000 direct and indirect jobs in the country with 90 percent of the employees being Nigerians.
In 2010, contribution from the companies to community development stood at $71.4 million.
Commenting on the situation in its area of operation, the managing director said: “The Niger Delta experienced relative stability in 2010. A continued government amnesty for militants who had been attacking oil facilities in recent years helped improve security. This allowed important projects to move forward. We were able to renew infrastructure, such as pipelines, and build facilities to collect gas produced with oil that is normally burned, or flared.”
The Shell boss said serious problems remain, adding that even though the number of violent attacks on it employees and contractors fell in 2010, they still occur. Gangs kidnapped 26 SPDC employees and contractors in 2010, and one contractor was killed in a related assault.
People remain trapped in poverty in the Delta, just as criminal gangs continue to steal oil from pipelines at an estimated rate of 100,000 barrels a day. Theft and illegal refining cause extensive environmental damage. Sabotage and theft together accounted for more than 80percent of the spill volume from SPDC facilities in 2010