Shell Petroleum Development Company Plc, SPDC, said it invested $281.2 million (N44.99 billion) in the Niger Delta in 2012.
Speaking at the launch of its ‘Let’s Go’ advertising campaign, in Lagos, Mr. Mutiu Sunmonu, Chairman, Shell Companies in Nigeria and Managing Director, SPDC, said the funds were invested in alleviating certain environmental issues in the region and also a part of its contribution to the Niger Delta Development Commission, NDDC.
Giving a breakdown of the investments, he said $103.2 million (N16.51 billion) was spent in addressing social and economic development challenges in the Niger Delta, while over $178 million (N28.48 billion) was contributed to the NDDC as required by law.
Also, parent company of SPDC — Royal Dutch Shell — yesterday, said it lost about $700 million (N112 billion) to crude theft and other sundry issues in Nigeria in the second quarter of 2013.
According to its second quarter financial statement, rising costs, oil theft in Nigeria and weak U.S. shale liquids production have hurt its profits, in addition to upward pressure on spending and to uncertainty on output growth.
Peter Voser, outgoing chief executive of Shell, said this led to its abandoning its target to deliver four million barrels a day of production by 2017.
Voser called the company’s second quarter result, published, yesterday, disappointing, adding, however, that a financial target to achieve $175 billion to $200 billion of cash flow from operations for the period 2012 to 2015 was intact.
He said, “Higher costs, exploration charges, adverse currency exchange rate effects and challenges in Nigeria have hit our bottom line. These results were undermined by a number of factors – but they were clearly disappointing for Shell.” Adjusted second quarter net earnings on a current cost of supply (CCS) basis came in at $4.6 billion, down from $5.7 billion a year ago and below analysts’ expectations of around last year’s figures.
Commenting on the ‘Let’s Go’ advertising campaign, Sunmonu said the company launched the campaign to share its goal of being the most competitive and innovative energy company.
According to him, the campaign is intended to demonstrate Shell’s contributions towards a better future for Nigeria and its people.
He said, “Shell’s messages are built around gas, health, education and job creation, and we believe these ‘life’ issues will enable Nigerians relate better to the challenges of a secure energy future.”
Sunmonu said the campaign is the first of its type in its advertising in Nigeria since its corporate identity campaign about a decade and a half ago.
“Aside from the themes being country specific, the campaign is also Nigerian content compliant. A Nigerian agency produced all the materials using Nigerian models in locations around Nigeria. We are proud to implement a wholly Nigerian ‘Let’s Go’ campaign,” he added.
According to figures obtained from the 2013 edition of Shell Nigeria Briefing Notes, the company said it has contributed about $42 billion to the Federal Government in the last five years — 2008 to 2012 — and also paid about $6 billion in taxes and royalties within the same period.
The company further stated that in 2012, Shell-run companies awarded contracts worth almost $2.4 billion (N384 billion) to Nigerian companies representing about 64 per cent of the total number of contracts awarded in the year.
The company said, “The total value of contracts awarded to Nigerian companies in 2012 increased by about 71 per cent when compared to 2011. The use of locally manufactured goods and Nigerian service companies in several areas created tens of thousands of jobs for workers in communities around which we operate.”
Eni cuts target over disruptions in Nigeria
Italian oil major Eni cut its annual production target on Thursday and joined rival Shell in highlighting outages in Nigeria as a drag on second quarter profit.
The world’s Number seven oil company by volume, which was previously targeting output growth this year, said it now expected oil and gas production to be in line with 2012.
The company has also had supply disruptions in Libya and its 43 per cent-owned oil services arm Saipem has issued two profit warnings.
Eni is the biggest foreign operator in Libya where disruption has led to a slump in Libyan oil exports of 70 percent. But Eni said outages were a problem in Nigeria, where theft is a festering problem.
“Performance (in Q2) was affected by force majeure events in Nigeria, particularly significant, and in Libya,” Eni said.
Sources told Reuters on Wednesday that Shell would sell more oil blocks in Nigeria in its latest divestment from Africa’s biggest oil exporter.
The blocks are in joint ventures which include Eni. Eni declined to comment when asked if it could sell its share in the case Shell sold. In previous deals, Eni has sold its shares.
“The disruptions in Libya and Nigeria were flagged as too was Saipem. These results are probably a nadir for Eni and 2014-2015 delivery prospects look good,” Santander analyst Jason Kenney said.
Eni shares were up 1.8 percent, outperforming the European oil and gas index.
Net profit in the second quarter fell 55 percent to 580 million euros ($770.15 million), below a Reuters analyst poll forecast of 683 million euros.
“We expect a significant improvement in our second-half results,” Eni CEO Paolo Scaroni said, noting he was pleased with the company’s six production start-ups so far this year.
Eni, which has shifted focus to upstream development by selling non-core assets, has made a series of major discoveries in recent years including a blockbuster gas discovery in Mozambique which is expected to come on line in 2019.
But some analysts have questioned Eni’s ability to deliver such large-scale projects on budget and time, especially after experience in Kazakhstan where Kashagan, the world’s largest oil development, has been hit by huge cost overruns and delays.
Eni said on Thursday it expected production start-up at Kashagan “in the coming weeks”.
The state-controlled oil major, which produced 1.648 million barrels of oil equivalent per day in the second quarter, has plans to bring 450,000 boe/d of new production on stream in 2013-2014 from 15 projects.
Earlier on Thursday Eni, the biggest foreign oil and gas player in Africa, announced a major new discovery in Congo.
But flagging gas sales continue to weigh on profitability. Eni, Russia’s biggest gas client, lowered its gas sales forecast for the year on Thursday, saying they would be lower than in 2012. In first-quarter results it said it saw sales in line with last year’s.
Eni is now renegotiating most of its long-term take-or-pay gas contracts which have fixed prices that are above spot market prices.
Oil rises above $109 on demand outlook, supply cuts
Oil rose more than $1 to above $109 a barrel on Thursday as upbeat economic data from China and Europe pointed to a stronger demand outlook and unrest in Libya and Iraq disrupted supplies. China’s official purchasing manager’s index came in higher than expected on Thursday and a survey showed euro zone manufacturing returned to growth in July, suggesting the region may pull out of recession this quarter.
Brent crude gained $1.18 to $108.88 a barrel by 1350 GMT and hit $109.45 intra-day, the highest since July 16. It ended July with the largest monthly percentage gain since August 2012. U.S. crude outpaced Brent, adding $2.43 to $107.46.
“The main reason is better-than-expected data from China and also the fact that the Fed did not give any hint about ceasing stimulus,” said Carsten Fritsch, analyst at Commerzbank in Frankfurt.
The U.S. central bank on Wednesday said the economy continued to recover but was still in need of support, offering no sign it is planning to curb its bond buying at its next meeting in September. That stimulus has broadly underpinned commodity prices.
Further brightening the U.S. economic outlook, the number of Americans filing new claims for unemployment benefits fell unexpectedly last week, the Labor Department said, offering hope the government’s comprehensive employment report on Friday could also indicate healthy job gains.
Concern over supplies from Libya, Iraq and Nigeria is also underpinning prices. The disruptions helped trim OPEC output to a four-month low in July, according to a Reuters survey published on Wednesday. In Libya, protests at oilfields and terminals cut average supply to 1.15 million bpd in July, according to the survey, down 150,000 bpd from June. Libya’s oil minister said output had fallen 330,000 bpd from 1.4 million bpd on Monday.
Iraq’s production has also come under downward pressure as Sunni insurgents are targeting its northern pipeline, while technical problems are curbing output in the south.
Europe’s biggest oil company, Royal Dutch Shell, said a surge in oil theft in Nigeria contributed to lower second-quarter profit, while Italy’s Eni cut its production target and highlighted Nigerian outages. Lending further support, oil inventories at the Cushing, Oklahoma, delivery point for the U.S. crude contract fell for a fifth straight week, government data showed on Wednesday, although overall stocks increased.
Source: Vanguard
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