Impact of Large Scale Gas & Power
Projects-Nigeria Experience
Energy Africa Event
29-30 October 2015
Session 1: Connecting Large Scale
Projects to Local Communities and
Development
Colorado School of Mines, Golden, USA
Philip Mshebila
GM Upstream Gas
SPDC
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DEFINITIONS AND CAUTIONARY NOTE
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OUTLINE
 Royal Dutch Shell:
 Global
 Nigeria
 Shell Nigeria’s Large Scale Gas & Power Projects –
Metrics & Local Impact:
 Gbaran Ubie
 Afam Power Plant & Okoloma Gas Facility
 Nigeria LNG in Bonny Community
 Corporate Projects – Local Content, Education,
Healthcare
 Summary
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SHELL AT A GLANCE - 2014
94,000
$45
Average number
of people we employed
Cash flow from
operating activities
billion
70+
Number of countries
in which we operated
40+
3%
2%
Number of LNG vessels we
manage and operate
Our share of the
world’s
gas production
Our share of the
world’s
oil production
24
51.8%
10%
3.1
Share of our
production that was
natural gas
Our share of the
world’s LNG sold
Barrels of oil
equivalent produced
every day
$1.2
$160
billion
Amount we spent
on R&D
million
Spent on voluntary
social investment
worldwide
Copyright Shell International Exploration and Production B.V.
million
million
Tonnes of equity LNG
we sold
$13.7
billion
Spent in lower-income
countries
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NIGERIA: POPULOUS, DIVERSE & COMPLEX

Population (UN): ~182 million people (7th
largest in the world)

UN: Nigeria will be 3rd most populous
country by 2050 with ~400 million people

OPEC estimates oil reserves of ~35 billion
barrels and ~185tcf gas reserves

Produces ~2.5million barrels of oil/day

10th largest proven oil reserves, 9th gas
reserves

20% of population live in the Niger Delta

Niger Delta:


112,000 square km (size of Belgium and
Netherlands). Land, swamp and coastal
areas
Population (33million) has over 40 ethnic
groups & diverse communities +4000. Shell
Petroleum Development Company of
Nigeria (SPDC) interfaces with ~1000
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NIGERIA
THE
NIGER DELTA –
Oil producing
area
400 km
MAJOR OIL AND GAS PROVINCE
SHELL PRESENCE SINCE 1950s
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SHELL BUSINESSES IN NIGERIA
SPDC JV*
SNEPCo
Shell Petroleum
Development Company
Shell Nigeria
Exploration &
production Company
NNPC - 55%, Shell 30%, Total- 10%, Agip 5%
PSC contractor to
NNPC & operator of
OML 118
SNEPCo -55%
Esso 20%, NAE 12.5 %,
Total -12.5%
10 gas plants
1 power plant
Gas production:
2.3bcf/d
Power: 650MW
Operator of Bonga
deepwater field/FPSO
150 MMscf/d of Bonga
gas now to supply
DomGas
NLNG
WAPCO
Shell Nigeria Gas Ltd
Nigeria Liquefied
Natural Gas Ltd
West African Pipeline
Company
100% Shell owned
NNPC - 49%, Shell –
25.6%, Total - 15%, Eni
– 10.4%
NNPC - 25%, Shell –
18%, Chevron
(Operator) - 37%,
Takoradi Power – 16%,
Bengaz & SLG – 2%
each
Transmission and
distribution network
~ 125 kilometres of gas
pipelines
Accounts for ~10% of
world’s total LNG
capacity
Trans-regional pipeline
supplying 3 ECOWAS
countries
Supply capacity is
42MMscf/d
Overall capacity of
some 21.6 million
tonnes per annum LNG
Overall capacity of
some 470MMscf/
SNG
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SHELL NIGERIA ECONOMIC CONTRIBUTIONS
Nigeria
Shell Companies
7
* Source: World Bank
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PARTNERING WITH NIGERIAN GOVERNMENT
TO DEVELOP GAS & POWER
Okoloma Gas Plant240MMscf/d*
* Capacity
Afam VI, 650MW CCGT*
Gbaran Ubie Gas Plant 1.2bcf/d*
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OUR APPROACH TO LOCAL IMPACT INVESTMENT
Informing
Involving
Empowering
Self Reliant
$’m
Empowerment.
HCD, CH and
Strategic Partnership
80
Micro-credit
Women Programs
added
70
60
Agric., YTS,
Scholarships,
Health
50
40
30
GMoU
introduced
20
Comm. Foundations
Community owned utility companies
Community Operated Ventures
10
0
86
87
88
89
90
91
92
93
94
95
96
97
98
99 2000 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 ‘13
Community Assistance
Community
Development

Nigeria is the largest recipient of social investment
by the Shell Group globally

$14.8 million invested in scholarships in 2014

>14,000 scholarships to Nigerian students

6000 Niger Delta youths trained in business and
enterprise development since 2003
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2015
Sustainable
Community
Development
‘15
‘17
‘20
Business Del. Framework
Focus
areas

Community Health: strengthening health
systems and expanding opportunities for
healthcare access

Education: Improving access to quality education

LiveWIRE: Youth and women enterprise
development to increase employment

Global Memorandum of Understanding
(GMoU): Community driven development
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LARGE SCALE PROJECTS – SOCIAL BENEFITS
GBARAN UBIE OIL & GAS
PROJECT
GLOBAL MEMORANDUM OF UNDERSTANDING (GMOU)

Governance model for community projects

Community driving their own development with Shell funding and support
DEVELOPING LOCAL MARKETS
AFAM VI POWER PLANT

Supply of gas to power connected to the grid-Afam, Gbaran

Develop local LPG market and cleaner fuel use.
LOCAL CONTENT, EMPLOYMENT AND SMEs

SME financing

Contractor fund

LiveWIRE Program
DEVELOPING PEOLE AND HEALTHCARE
NLNG

Scholarship schemes

Community healthcare: Community Health Insurance Scheme

Health-in-Motion
SOCIAL INFRASTRUCTURE
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
Roads, electricity supply, water schemes

Schools, health facilities etc

Markets and road transportation
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GOVERNANCE MECHANISM: GMOU
PRIOR REALITIES


Fragmentation of
communities and
expansion of footprint
Ineffective grievance
handling
FEATURES OF THE GMOU

Clustering agreed with
communities, government and local
institutions
Centralized community interface
 Detailed longer term agreements

GMoU Steering
Committee
(led by State
Government)
CLUSTER
DEVELOPMENT
BOARD
(communities,
SPDC, NAPIMS,
governments)


Legacy issues
Frequent disruptions
Technical Committee
Finance & Resource
Management Committee
Conflict Management &
Peace Committee
Builds communities capacity to
drive development
 Built-in grievance
management systems

Capacity, Communications
& Partnership Committee
unsustainable


Addresses legacy issues
Fosters social cohesion
Principles:
1. Community decides
2. SPDC JV funds
HIGH SUSTAINABILITY PROSPECTS
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3. Development NGO’s build capacity
4. Community implemented
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SOME SHELL NIGERIA LARGE SCALE PROJECTS
GBARAN
GBARANUBIE
UBIE GAS
OIL &PLANT
GAS
PROJECT
AFAM VI POWER PLANT
NLNG
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of Shell Companies
of Shell Companies
in Nigeriain(SCiN)
Nig)
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GBARAN UBIE OIL & GAS PROJECT

World class gas project; on-stream 2010

1 bcf/d & 70 kbbl/d liquids capacity

Gas supply to Export and Domestic power

$1 billion in local content

95% of construction workforce was Nigerian

4 GMOUs in the area covering 44 local communities

200,000 people benefiting from electrification projects.
AFAM VI – POWER PLANT & OKOLOMA GAS PLANT

CCGT gas fired power plant

First Power 2008, construction began 2005

650 MW capacity

Around 18% of the power contribution to the national grid

Gas provided by SPDC JV Okoloma facility
(240 mmscf/d capacity)
NIGERIA LIQUEFIED NATURAL GAS

6 LNG trains with production capacity of 22mtpa

Accounts for ~10% of world’s total LNG capacity

Most LPG used in Nigeria

Significant revenue generation for the nation
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GBARAN UBIE PROJECT FOOT PRINT Typical of other projects in the Niger Delta
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SOCIAL INFRASTRUCTURE :BONNY UTILITY COMPANY
A joint industry project – NLNG – 50%, SPDC -30% and Exxon Mobil – 20%
Need: Bonny Island power
availability, reliability, affordability
Commercial viability essential to
sustainability
7,760 buildings connected,
servicing ~ 62,000 people
98% availability of power in BUC
contour of supply
91% of all BUC positions filled by
Bonny indigenes
20% of customers enjoy free
electricity without buying credits
Community Project inspection visit to the Power Terminal
Control Room.
60% as small residential
customers pay less than
$2.50/month
20% pay higher commercial
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GROWING LOCAL CONTENT,
EMPLOYMENT AND SMEs
$5billion SME Financing
N4.5 Billion Kobo Fund (Contractor Funding)
90% of SCiN contracts were awarded to
Nigerian companies in 2014
SCiN recognised for its work in local content
, including the 2013 Local Content Operator
of the year award from the Petroleum
Technology Association of Nigeria.
LiveWIRE:
 over 6,000 youths trained since 2003 and
over 3,000 businesses and employment
opportunities created
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DEVELOPING PEOPLE AND HEALTH CARE
~ 45,000 scholarship awards
between1991-2014
10 Niger Delta postgraduate
scholarships to top UK universities
annually
Discovery Channel Global
Education Partnership : 18 AudioVisual Centres
“Health-in-Motion” benefited over
half a million people since 2007
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SUMMARY
Shell in Nigeria has executed various large scale gas &
power projects with huge positive impacts on the local
economy
We have multiple fit-for-purpose channels to create
positive impact on the local economy via our projects
Shell has partnered with other key players in Nigeria to
improve energy availability, empower Nigerian companies
and create sustainable local economy
Illegal refining of stolen
crude
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BUILDING LOCAL CAPACITY – SHELL CONTRACTORS’ FUND
ACHIEVEMENTS
•
F$914.0 Mln. USD approved loans to-date
•
77 contractors benefitted from Loans
•
Scheme won the 2013 Chief Executive Officer’s HSSE &
SP Awards - Excellence in Social Performance category
•
Shell pioneered effort, now replicated in other IOCs in
Nigeria
•
Business solution to a real business challenge – better
funds mgt. and reduced pressure for advance payment
from contractors
•
Banks’ higher support for Oil & Gas industry operations as
a result of better understanding, through dialogue,
collaboration, networking and interaction with Shell
Contractors
•
Good example of venture support, finance innovation,
commercial mind-set with external focus, to support
business delivery
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COMMUNITY HEALTH INSURANCE SCHEME
 A model to provide quality assured health care to achieve
Universal Health Coverage
 Public Private People Partnership (PPPP) approach–
community driven
 State Government – human resources & the facility
 SPDC – provides technical support
 People /communities – support volunteerism, marketing and
donations
 CHIS launched at Obio Cottage Hospital in 2010
 Funding - GMoU subsidized the schemes
 Benefit package – Primary and secondary care with

Growth monitoring during one of the routine
Immunization at Obio Cottage Hospital
surgeries; home visits and clients support services
92% enrollees satisfied with services while 99% of
beneficiaries now recommend the scheme to others

70% of the 3,433 surgeries performed were caesarean
sections

13,818 children fully immunized since 2011
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LIVEWIRE PROGRAM – ENTERPRISE DEVELOPMENT
Help Young people Start businesses, build
skills and turn their ideas into long-term
sources of income.
Tackle unemployment mostly by providing prestart up business awareness, planning and
management training, limited business capital
and mentors/business incubation opportunities
Programme has trained 6,140 Niger Delta
youths in enterprise development and 3,142
youths assisted to set up businesses
So far, 3 LiveWIRE beneficiaries have won
international awards, which enabled them to
visit England and Dubai to network and develop
business linkages, on the Go and Trade Award
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SOCIAL INFRASTRUCTURE
From 2007 to 2014, access within and between
several communities were enhanced through SPDC
support.
During the period, over 70 km of tarred and concrete
roads were constructed or rehabilitated.
Other community projects include:
22 Electricity supply;
Bonny By-pass (Swamp Road)
55 Water schemes,
61 Town halls/Civic centres,
6 Market stalls,
13 Jetties/shore protection/Landfill,
20 Health centres
110 schools
Bakana Foot Bridge, Rivers State
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