Nigeria, the largest oil producer in Africa, saw a further decline in payments from Shell last year, falling to third place, far behind peers like Norway who benefited from increased oil prices.
Despite the fact that Nigeria received more money in 2018 compared to 2021, Norway, Malaysia, Oman, and Brazil all saw larger increases, according to data collected from Shell’s reports on payments.
Up until 2021, Nigeria was the nation that received the most money from Shell, receiving $4.48 billion, while Norway received the largest sum, or about $4.52 billion.
The energy behemoth paid the Nigerian government a record $6.39 billion in 2018, but that amount dropped to $5.63 billion in 2019 and $3.24 billion in 2020.
Shell and Chevron, two international oil companies (IOCs), reported record earnings for 2022 as a result of the sharp price increase that followed Russia’s invasion of Ukraine.
Shell’s annual profit increased by more than doubling to $39.9 billion, the highest in its 115-year existence, as its payments to the nations where it conducts business increased by about 64.79 percent year over year to about $34.37 billion. ExxonMobil and Chevron both declared profits of $56 billion and $35.5 billion, respectively, which were both record highs.
Shell increased its payment to Nigeria by 0.92 percent last year, to $4.52 billion, while Norway saw a rise of about $7.72 billion, or 70.85 percent. The slight rise in payment to the Nigerian government reflects the faltering fortunes of the nation’s vital oil and gas industry.
Payments to Oman and Qatar increased by more than twofold to $4.56 billion and $3.68 billion, respectively. Brazil’s Shell revenue grew by 87.40% to $4.34 billion, while Malaysia’s revenue increased by 39.46% to $4.47 billion.
Payments to governments, according to Shell’s most recent report, were “derived from activities involving the exploration, prospection, discovery, development, and extraction of minerals, oil and natural gas deposits, or other materials” (extractive activities).
Last year, its Nigerian companies paid $3.03 billion in production entitlement to the Nigerian National Petroleum Corporation (NNPC) and paid $711.85 million in taxes to the Federal Inland Revenue Service.
About $691.65 million and $1.79 million in royalties and fees were given to the regulator, the now-defunct Department of Petroleum Resources (now known as the Nigerian Upstream Petroleum Regulatory Commission, or NUPRC), while $79.84 million was sent to the Niger Delta Development Commission.
The World Bank stated in its most recent Nigeria Development Update report that Nigeria “has not benefited substantially from the global energy price boom due to the costly petrol subsidy and record low oil production.” The Nigerian economy has traditionally benefited from increases in oil prices, but in 2021–22, this has not been the case.
Due to increasing theft, pipeline vandalism, and underinvestment, crude oil output in Nigeria fell below 1 million barrels per day (bpd) last year, reaching its lowest level in several decades. NUPRC statistics show that it increased recently, reaching 1.31 million bpd in February.
Due to high costs, high security risks, the Federation’s inability to pay fully and on time for its share of costs in joint-venture operations, and previously, uncertainties about the future fiscal terms, now outlined in the Petroleum Industry Act, oil production remains below the average production level of the last ten years. (PIA). The management and governance of the oil industry remain unclear despite the passage of the PIA, according to the World Bank.
According to the business, its portion of the nation’s onshore and offshore production in 2022 was 131,000 barrels of oil equivalent per day (boe/d), down from 175,000boe/d in 2021.
According to the company’s annual report, “security concerns, sabotage, and crude oil theft in the Niger Delta continued and remained significant challenges to our onshore operations in 2022, leading to a significant reduction of crude available for export from the Bonny terminal for several months.”
The force majeure that Shell Petroleum Development Company of Nigeria declared on the Bonny export program almost a year ago was removed two weeks ago.
In 2021, Shell declared that it would lessen its contribution to Nigeria’s onshore oil output. In accordance with a Supreme Court decision that stated it had to wait for the result of an appeal over an oil spill in 2019, it put on hold plans to sell its assets last year.
Since 2010, when Seplat Energy Plc and other local operators began acquiring oil blocks as part of the divestiture, IOCs working in the nation have had to sell many of their onshore assets.
In February of last year, ExxonMobil made the announcement that it had decided to sell its equity share in Mobil Producing Nigeria Unlimited, which owns a 40% stake in four oil mining licenses and more than 90 shallow-water and onshore platforms as well as 300 active wells. The regulator and NNPC, however, have stopped the deal.
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