Shell Petroleum Development Co. of Nigeria Ltd. has proposed a capital budget of $1.63 billion this year by partners in a venture that accounts for almost half of Nigeria's oil production.
However, the company fears spending may have to be curtailed because state owned Nigerian National Petroleum Corp. (NNPC), a partner, appears unable to raise its share of the cash.
Shell owns a 30% interest and operates the onshore production venture, with NNPC holding 55%, Elf Nigeria Ltd. 10%, and Agip SpA 5%.
Brian Anderson, Shell Nigeria chairman and managing director, told a London conference last week the venture's 1996 budget has not been approved by the Nigerian government.
"We expect the budget to be cut to $1.3 billion," Anderson said, "but the shortfall could be even more. Last year's proposed budget was $1.5 billion, but only $1 billion was spent because NNPC couldn't fully pay its share."
Anderson came under fire at the meeting from protesters who criticized, among other things, Shell's treatment of communities in oil producing areas (Watching the World, opposite).
Anderson warned that if NNPC does not provide its share of the venture's budget, some spending will have to be deferred. He said government's revenue from oil exports in 1996 is expected to amount to $7 billion.
While Shell has been instrumental in persuading government to raise to 13% from 3% the amount of oil income promised for spending in oil producing communities, there is no guarantee the money will be made available.
Anderson said the venture spent $150 million last year on projects to improve its environmental performance and another $22 million on community projects. This year's budget includes $90 million for environmental projects and $30 million for community projects.
Shell is sponsoring a survey of the environmental and social problems of the Niger Delta.
Operations
The Shell combine produces 930,000 b/d of oil from 94 onshore fields. It is upgrading producing facilities and pipelines in a $2 billion program due to be complete in 1998.
The venture also is working to reduce gas flaring in its oil fields 20% by 1999. Some oil wells that produce large volumes of gas have been shut in, and some flare gas will be diverted to feed the much delayed Bonny Island liquefied natural gas export project (OGJ, Dec. 25, 1995, p. 28).
A further 10% reduction in gas flaring from the venture's fields, estimated to amount to 1 bcfd, will come from gas sales to an aluminum plant due on stream in 1999.
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