Royal Dutch Shell has sealed a $300m deal with Shoreline Energy to develop, market and distribute natural gas around Lagos and its environs.
In the deal, Shell would finance and develop a transmission and distribution pipeline network to generate revenues from a 20-year gas concession.
The was previously owned and operated by Gasland Company, but Shoreline Energy came into possession of the network when it took a 75 percent stake in Gasland Company in 2015.
According to Shell’s Nigerian subsidiary, the deal would be announced next Monday, stating that it would represent “an important next step in the expansion of the Nigerian domestic gas market”.
Shell General Manager, Oil and Gas, Philip Mshelbila, said Shell decided to invest in the sector because it sees Africa as an important part of their global efforts to drive demand for gas as a cleaner and more efficient alternative to coal, diesel and fuel oil in power generation, transport and industrial processes.
He said, for instance, that though Nigeria is richly endowed with enormous gas deposit and could be the continent’s largest gas reserves, yet suffers from severe power supply shortages due to inadequate infrastructure.
The country largely depends on petrol and diesel-powered generators to provide their own electricity because of inadequate supply of electricity which also depends on the availability of gas.
Mshelbila said Shell was assiduously to ensure that the huge gas deposit was adequately maximised.
It would be recalled that Eni of Italy is investing in a gas terminal and pipeline to connect newly developed gas resources off the coast of Ghana to the local market and Total of France is building a floating gas storage facility off Ivory Coast.
The deal gives Shoreline Energy ample chance to diversify into the gas business after years of fiscal troubles as oil prices fell and renewed militancy in the Niger Delta region hurt production and exports.
Shell had severally shut down production lines following attacks on its facilities and kidnap of some of its personnel in the creek.
The Chairman of Gasland and the chief executive of Shoreline, Kola Karim, expressed delight with the development, stressing that it would boost gas supply to electricity distribution companies and for domestic consumption.
“The partnership is a significant boost to the gas supply efforts of the federal and Lagos state governments and will deliver tangible benefits to companies and households in Lagos.”
Meanwhile, Shell and Petrobras last week in The Hague, Netherlands, signed a Memorandum of Understanding (MoU) to establish a long-term mutual collaboration in developing pre-salt fields in Brazil.
In the partnership Shell will benefit from technical solutions, contract management expertise and cost efficient initiatives.
Shell will share with Petrobras its global deep water experience, especially on cost efficiency efforts and use of technology.
The MoU also involves sharing best practices and learnings on safety and governance management, technical and operational solutions, contract management, logistics, wells construction and air transportation safety.
The document was signed by Shell CEO Ben Van Beurden and Petrobras CEO Pedro Parente, during a visit by Petrobras’ executives to the Shell headquarters.
“Competitive growth of deep-water resources remains key to our company’s strategy for decades to come, and we’re very pleased to advance the technical and operational benefits of our joint-ventures with Petrobras in Brazil,” said Wael Sawan, Executive Vice-President, Deep Water for Shell. “We’ve seen cost, safety, innovative thinking, and production growth evolve in a very positive way. Preferred partnerships and shared expertise are core to that success.”
The agreement is valid for five years and can be renewed. Shell is a strategic partner of Petrobras in the pre-salt, with minority interests in the Libra and Lula fields and other important areas such as Sapinhoá, Lapa, and Iara, all of which are in Santos Basin.
