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Seplat sees no oil theft in Nigeria, where Shell lost $1bn

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Seplat Petroleum Development Co., the Nigerian oil producer raising $500 million from investors, said it had “absolutely no” theft in Nigeria, where Royal Dutch Shell plc lost almost $1 billion due to sabotage in 2013, reports Bloomberg.

Seplat in July 2010 bought three licences from Shell onshore Niger Delta, which had been idled for about 18 months, and is bidding for stakes in two more, said A. B. C. Orjiako, Seplat chairman. The company developed the “Seplat model” of engagement with communities by hiring locals to provide services and oilfield security, he said.

“We haven’t employed the thieves and criminals, but we made things difficult for them to operate in the area,” Orjiako said in a phone interview March 11. “Today we are very happy to see that Seplat has absolutely no incidents or disruptions due to community unrest.”

Shell earnings were curbed by almost $1 billion last year in Nigeria because of oil theft and liquefied natural gas export blockade by the government, Simon Henry, chief financial officer, said yesterday. It’s divesting holdings in the country, where it estimates oil valued at about $1 billion is stolen every month.

The thefts by armed gangs operating in the Niger Delta cost the government $7 billion in revenue in 2011, about a quarter of last year’s national budget, according to the Central Bank of Nigeria (CBN).

“Security is a headache on a day-to-day basis,” Henry said. “The theft is very material.”

Seplat, which this week announced plans for an initial public offering in London and Nigeria, pumps about 62,000 barrels a day, almost four times more than when it took over the licences. It relies on Shell infrastructure to export the oil, as do other indigenous companies operating in the country.

As a smaller operation, Lagos-based Seplat has more flexibility to share wealth with local communities, said Orjiako, who started his oil career by trading fuel with Glencore Xstrata plc and Vitol Group about two decades ago.

“Shell is a different kind of animal” and “their footprint is too large in Nigeria,” the Seplat chairman said. “It’s not as easy for them to manage in a nimble way that a company like Seplat would do.”

Shell contributed more than $100 million in community projects, such as agriculture and health care, in the Niger Delta last year, The Hague-based company said. Shell-led ventures contributed more than $700 million to a government educational fund in the five years to 2014.

The Anglo-Dutch company has been operating in Nigeria since 1937, spreading its operations over 20,000 square kilometres with 6,000 kilometres (3,729 miles) of pipelines, according to its website. Its “companies in Nigeria support and finance programmes that address social and economic challenges,” Mutiu Sunmonu, managing director, Shell Nigeria, said February 26.

The oil theft and security issues vary through different areas in the Niger Delta, which is the size of Scotland, Olalekan Akinyanmi, chief executive officer at Lekoil Ltd., said in phone interview. His company so far has only offshore oil fields, where security issues are of less concern, and has been examining plans to bid for licences onshore, he said.

“We know the hot spots” and won’t move into these areas, he said. “You need to add value” to local communities to reduce risk of incidents and “there is no special formula” for doing this.

2 Responses to Seplat sees no oil theft in Nigeria, where Shell lost $1bn

  1. Perhaps Shell may want to learn a few things from Seplat about what strategies they deploy in securing an ” absolutely no theft” situation.

    ayo
    March 18, 2014 at 7:52 am
    Reply

  2. Perharps shell has been lying so as to avoid taxes

    Obodo Ejiro
    March 18, 2014 at 9:52 am
    Reply

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