Shell Plc has revealed that its Nigerian subsidiary, Shell Petroleum Development Company of Nigeria Limited (SPDC), the operator of the SPDC joint venture, reported 20 operational spill incidents of more than 100 kilograms of crude oil in 2024.
This disclosure is contained in the 2024 Annual Report and Accounts of Shell Plc, where it states that this represents a 122% increase when compared to the 9 spill incidents that were reported in 2023.
The report states that the increase in the number of operational spill incidents was largely because of a rise in cases of failure due to factory defects in a locally manufactured clamp used in pipeline repairs following the removal of illegal connections.
The company that manufactured the clamps has recalled the affected batch, and SPDC has commenced the replacement of the clamps.
Spills caused by crude oil theft, sabotage
According to the report, in 2024, the volume of operational spills of oil and oil products was 0.37 thousand tonnes compared with 0.005 thousand tonnes reported in 2023. The majority (89%) of the 2024 volume relates to two significant incidents, one onshore on the Trans Niger Pipeline and the other offshore at a terminal loading buoy.
SPDC JV has an ongoing work programme to appraise, maintain, and replace key sections of pipelines and low lines to reduce the number of operational spills.
Shell reported that in 2024, about 81% of crude oil spill incidents of more than 100 kilograms from SPDC JV facilities were caused by the illegal activities of third parties.
In 2024, the volume of crude oil spills of more than 100 kilograms caused by crude theft and sabotage was 2.0 thousand tonnes (84 incidents), compared with 1.4 thousand tonnes (139 incidents) in 2023. The decrease in the number of incidents in 2024 shows an increased effectiveness of anti-theft protection mechanisms.
Stopping the spills
The report stated that in 2024, SPDC JV continued on-ground surveillance of its areas of operation, including its pipeline network, to mitigate third-party interference and ensure that spills are detected and responded to as quickly as possible.
- It noted that regular surveillance flights and drones are used to inspect the most vulnerable segments of the pipeline network, monitor security, and identify any new spills or illegal activity.
- SPDC JV continued to install and improve anti-theft protection mechanisms for key infrastructure, such as wellheads and manifolds. These include protective measures such as cages, anti-theft nuts, and improved CCTV and networking capabilities. These measures continue to help deter theft and improve response.
SPDC JV continued to work with the government security agencies in 2024 to maintain surveillance and address illegal activities of third parties, primarily along the SPDC JV pipelines and their operational areas.
Nigeria as High-Risk Operating Environment
Shell in the report noted that it operates in over 70 countries, which have differing degrees of political, legal, and fiscal stability, adding that it exposes the energy firm to a wide range of political developments that could result in changes to contractual terms, laws, and regulations.
- It also faces various risks from the business and operating environment in Nigeria, which could have a material adverse effect on its business.
- Some of the risks include developments in politics, laws, and regulations that can and do affect the supply chains and operations.
- Potential impacts, which have been experienced in the past, include: forced divestment of assets; expropriation of property; cancellation or forced renegotiation of contract rights; delay of new projects; additional tariffs and taxes, including windfall taxes (especially during periods of prolonged high oil and gas prices experienced in recent years, such as 2022); restrictions on deductions and retroactive tax claims; antitrust claims.
Others are changes to trade compliance regulations, price controls, local content requirements, foreign exchange controls, changes to environmental regulations, changes to regulatory interpretations and enforcement, and changes to disclosure requirements.
The report further stated, ‘’Many parts of the world are facing economic and fiscal challenges and growing pressure on cost-of-living standards. These issues impact our business as governments, in response to political and social pressures, pursue policies that could have a material adverse effect on our earnings, cash flows, and financial condition.
‘’The world is also facing continued geopolitical instability, including the Russia-Ukraine war, which impacts market conditions and our operations. The broader consequences of the ongoing crisis in the Middle East remain uncertain, and a wider escalation could have greater impacts on our operations in the region and beyond.’’
