Royal Dutch Shell Staying Put in Nigeria
The belief that Royal Dutch Shell was in the beginning stages of phasing out operations in the country of Nigeria changed in early May. That was when the company announced that they would be investing approximately $25 billion in multiple countries over the remainder of 2017, a group that includes Nigeria.
The reason for early concerns about closing up shop in the most populous African country stemmed from a number of factors, including sabotage and litigation that came about within the country. Within Nigeria, Shell was able to again start oil production on the Bonga FPSO, which regularly produces 225,000 barrels per day. That production had been affected by an oil spill in late 2014.
Another key area where Shell has been prominent has been what’s known as the Zabazaba Deepwater project that’s located in the OPL 245 oil block, the largest such block in Africa. This is a $13.5 billion effort with 560 million barrels of proven reserves.
The project is set to begin soon after years of controversy that were related to the company’s original payment in 2011 that were seen as payoffs to high-ranking Nigerian officials. In addition, the original cost projections were thought to make any further investment a waste.
The idea that Shell would leave Nigeria would hold some historical significance with the company, considering that it’s been the country’s longest-running oil partner. With the Zabazaba Deepwater project, its partner in the endeavor is the Nigerian National Petroleum Corporation (NNPC).
The news of Shell’s investment came soon after the company announced its impressive earnings that saw them projecting as much as $10 billion in cash flow with new projects through the end of next year. Just within the three-month period ending in March, the company’s net profit doubled.