Shell loses N23bn over insecurity in Nigeria, others

Royal Dutch Shell said yesterday that it lost $146 million, about N23.36 billion from insecurity in Nigeria, and from the impact of its divestment across the globe, among others, in the third quarter of 2014.

The company, in its third quarter 2014 financial statement released to the investing community, also stated that it is expecting $15 billion, about N2.4 trillion from its assets in the Niger Delta region of Nigeria.

Shell recorded oil and gas production of 2.79 million barrels of oil equivalent per day in the third quarter of 2014, representing a 4.81 per cent decline from 2.93 million barrels per day recorded in third of 2013 and a decline of 9.33 per cent from 3.077 million barrels per day recorded in the second quarter of 2014.

According to the financial statement, Shell’s liquids production decreased by four per cent, while natural gas production decreased by six per cent, compared with the third quarter 2013. “Excluding the impact of divestments, Abu Dhabi license expiry, PSC price effects, and security impacts in Nigeria, third quarter 2014 production was two per cent higher than for the same period last year.

“Underlying production was driven by increased high-margin liquids production in the Americas, including the impact of substantially lower downtime, partly offset by higher downtime elsewhere,” the company said.

The company said it recorded first production from the Bonga North West deep-water development, saying oil from the Bonga North West subsea facilities is transported by a new undersea pipeline to the existing Bonga floating production, storage and offloading (FPSO) export facility.

The company said the Bonga FPSO has been upgraded to handle the additional oil flow from Bonga North West which, at peak production, is expected to contribute 40,000 barrels of oil equivalent per day.

“Shell announced the final investment decision on the Bonga Main phase three project offshore Nigeria. The development is expected to contribute some 40,000 barrels of oil equivalent per day production through the existing Bonga FPSO export facility,” the company said.

Shell’s third quarter 2014 earnings, on a current cost of supplies (CCS) basis were $5.3 billion compared with $4.2 billion for the same quarter in 2013, while third quarter 2014 CCS earnings excluding identified items were $5.8 billion, compared with $4.5 billion for the third quarter 2013, representing an increase of 31 per cent.

Compared with the third quarter 2013, the company said CCS earnings excluding identified items benefitted from improved downstream and upstream results.

It said, “In Downstream, earnings benefited from increased contributions from refining including improved operating performance, and trading.

“In Upstream, earnings increased due to the impact of new, higher-margin production, lower exploration expenses, and higher earnings from Integrated Gas, despite the effect of lower oil prices and volumes overall.

“The increase of a deferred tax liability as a result of the weakening Australian dollar reduced earnings by some $400 million compared with the third quarter 2013.”

Mr. Ben van Beurden, Chief Executive Officer, Royal Dutch Shell, said, “Shell is proud to deliver high-quality fuels, lubricants and petrochemicals, for transportation, power generation and manufacturing industries. With over 90,000 employees in more than 70 countries around the world, Shell is dedicated to delivering low-cost, safe and reliable energy for our customers.

“The recent decline in oil prices is part of the volatility in our industry. It underlines the importance of our drive to get a tighter grip on performance management, keep a tight hold on costs and spending, and improve the balance between growth and returns.”