Speaking at a recent forum, Markus Droll, vice president, Nigeria & Gabon, Shell Upstream International, lamented the various challenges besetting oil companies operating in the Niger Delta region of Nigeria.
He emphasized that workers are still operating under grave danger, occasioned by crude oil theft and pipeline vandalism while contending with activities of armed criminal gangs, who are always on the prowl to snatch oil workers with a view to demanding ransom from their employers.
This, he said, is the grim reality in the region where construction workers, on infrastructural development that are of immense benefit to the people, are also not spared by the heavily armed criminals.
Droll said that oil and gas industry personnel are working hard and faced with considerable risks in the course of operations and continued development of the country.
He lamented that the industry over the years has learnt and adapted well to security threats though at great costs.
“Nigerian oil and gas industry personnel are working hard, and at the same time managing considerable risks, in order to play their part in the continued development of this country.
“As an industry, we must ensure better security. This remains a concern for many of us on a daily basis. Over the years, the industry has learned and adapted well to security threats, but we have done so at great costs. This is not sustainable, as both our development and operating costs are higher than in many other operating environments globally, due to security threats. Ultimately, it means that available funds for the industry don’t stretch as far as they would, if we had a safer operating environment. We all want a more lawful environment because such an environment fosters reduced cost and more investment. And in the end, more investment will contribute to a more lawful environment. It’s a vicious cycle,” he said.
On crude oil theft and pipeline sabotage, he said, “SPDC is taking a range of actions to counter them but our 2014 production was again severely affected by the direct impact of thieves placing illegal oil tapping connections on oil infrastructure. We routinely replace damaged pipelines and repair theft points during the year. This is a problem unique to Nigeria, and no other operating environment even comes close. Removing such connections often requires production systems to be shut down. So there is a compound effect between what is being stolen and what simply can’t be produced due to facility outages.”
He maintains that oil theft remains a complex issue that will require sustained, multi-stakeholder measures on a number of fronts to arrest, and ultimately reverse.
“I have always been of the view that together as an industry with support from government, we can succeed in turning this problem around,” he said.
While stressing the need for better security for workers in the oil and gas industry, he said, “A considerable part of our operations are under strict security limitations. We still need a more effective counter-strategy against oil theft and sabotage. While we have directed even more resources to try to counter this menace, it has become a bigger problem compared to a year ago. The methods employed are more brazen than ever.
“We still need better funding for capital projects and to clear pending payments on expenditure. We are very concerned about what impact the much lower oil price will have on 2015 funding. We still need more predictability around leases; if we increase certainty around leases, then investment becomes easier to attract.
“And we still need fiscal stability and predictability. This remains key in ensuring investors of all sizes can commit confidently, government revenues can be forecast reliably, and a capable service industry is maintained with a steady workload. As it stands, investors in Nigeria face very tough fiscal conditions,” Droll said.

Johnson Alabi
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