SPDC Sets out its Future Intent for Nigeria

PORT HARCOURT, Nigeria, June 21, 2013 /PRNewswire/ --

The Shell Petroleum Development Company of Nigeria Ltd (SPDC) as operator of the Nigerian National Petroleum Corporation (NNPC)/SPDC joint venture (SPDC JV) today announced that the SPDC JV (NNPC 55%, SPDC 30%, TOTAL 10%, NAOC 5%) has taken final investment decisions for the Trans Niger Pipeline loop-line (TNPL) and the Gbaran-Ubie Phase Two projects, both in Nigeria's eastern Niger Delta.  The total capital investment for the two bundles of projects is around $3.9 billion.  SPDC has also announced today a strategic review of the interests that it holds in selected onshore leases in the SPDC JV.

SPDC Managing Director, Mutiu Sunmonu said: "Today's announcements demonstrate our long term commitment to Nigeria by clearly signaling our intent for the strategic direction of Shell in Nigeria."

New investment in Nigeria oil and gas

The Trans Niger Pipeline (TNP) is important for Nigeria, pumping some 180,000 barrels per day of crude oil to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure, critical for continued domestic power generation (Afam VI power plant) and liquefied gas exports.

Sections of the TNP have been heavily impacted by sabotage and crude oil theft. The design of the TNPL includes improvements which make the pipeline better protected against crude oil theft and sabotage, which should help to reduce pollution related to criminal activity which was a key aspect of a 2011 United Nations Environment Programme (UNEP) report on Ogoniland. The total capital investment for the TNPL project bundle is expected to be $1.5 billion.

The Gbaran-Ubie Phase Two project consists of five gas supply and infrastructure projects which are critical for the continued gas supply to the Nigeria Liquefied Natural Gas (NLNG) plant and the Gbaran-Ubie domestic power plant (IPP). The total investment for the Gbaran-Ubie Phase Two bundle is $2.4 billion. The expected peak production from these projects is 215 kboe per day (100%).

Mutiu Sunmonu commented: "These investments will help to secure energy supplies for domestic and international markets.  The TNPL project demonstrates the tangible steps SPDC and its partners are taking to tackle the scourge of criminal activity - pipeline sabotage and crude theft in the Niger Delta, which is the cause of so much environmental and economic damage in this region."

Strategic review of SPDC interests in selected onshore leases

Today, Shell's 100%-owned subsidiary, SPDC, announced the initiation of a strategic review, consultation with partners, and the potential exit from the interests it holds in some further onshore leases in the Eastern part of the Niger Delta, subject to partner and regulatory approvals. The SPDC JV produced around 750 kboe per day of oil and gas in 2012 from 28 Oil Mining Licenses (OMLs) across the Niger Delta, both onshore and in the near offshore. SPDC has been following a strategy of selective divestments of its onshore portfolio, concentrating the operating footprint into a smaller, more contiguous area, while supporting the Government's policy of encouraging investment by indigenous companies in the Nigerian oil and gas industry. Since 2010, SPDC has sold its interest in eight OMLs for a total of $1.8 billion.

Mutiu Sunmonu further commented: "Nigeria remains an important part of Shell's portfolio, with clear growth potential, particularly in deepwater and onshore gas. This strategic review marks another step in re-focusing the SPDC portfolio."

Notes for editors

The Shell Petroleum Development Company of Nigeria Ltd (SPDC) is the operator of an unincorporated joint venture (SPDC JV) with the Nigerian state oil company NNPC, Total E&P Nigeria Limited ("TOTAL") and Nigerian AGIP Oil Company Limited ("NAOC").

TNPL is proposed to be executed by three indigenous contractors who have grown steadily over the past five years from medium sized companies to big players in the industry. The construction of the Gbaran-Ubie Phase Two project includes local and international companies. The estimated Nigerian Content value in terms of in-country manpower, goods and services that will be utilized in the execution of these projects is over 66%.

The social and economic benefits to the local communities are substantial. Aside from direct employment, many of the sub contractors will come from the local communities in line with the JV partners' local content commitment to develop capabilities within the Niger Delta region. There will also be direct social investment in skills growth and direct investment via the Global Memorandum of Understanding (GMOU) model.

Figures for oil & gas production and capital investment in this press release are shown on a 100% joint venture basis.

Cautionary note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies in which Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this announcement, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward looking statements concerning the financial condition, results of operations and businesses of Shell and the Shell Group. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Shell Group to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward looking statements. Additional factors that may affect future results are contained in Shell's 20-F for the year ended 31 December 2012 (available at http://www.shell.com/investor and http://www.sec.gov ). These factors also should be considered by the reader.  Each forward looking statement speaks only as of the date of this announcement, 21 June 2013. Neither Shell nor any of its subsidiaries nor the Shell Group undertake any obligation to publicly update or revise any forward looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward looking statements contained in this announcement.

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SOURCE Royal Dutch Shell plc

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