Shell retreats from Nigerian oil business

Shell is retreating from its key oil business in Nigeria amid long-running battles with thieves and racketeers. The blue chip giant lost around 5,660 barrels of oil per day last year – and far more in previous years – as criminals hacked into its vast network of pipes and sold the oil on local and international black markets.

Oil leaks caused by sabotage, as well as through its own operational problems such as cracked pipes and equipment breakdowns, have devastated local livelihoods and wildlife, triggering conflict and resentment.

Shell entered Nigeria in 1936 and the country's oil has helped the Anglo-Dutch firm become the £170billion mega-business it is today.But bosses are now focusing on Nigeria's vast gas reserves instead, seeing it as a cleaner, more efficient resource.

The move could help finally reverse Nigeria's damning paradox of being awash with resources while at the same time struggling to supply power its 182m residents' homes.

Shell has sold around 13 of its 33 oil wells in the country to Nigerian companies since 2010, with more sales possible. 

Over the past few years, Nigeria's small independent oil producers have spent billions buying assets from the big international players.

As Shell steps up its focus on gas, Osagie Okunbor, the boss of its operations in Nigeria, this week said it was about to make a final investment decision on a 300m cubic feet gas project in the south of the country. It would supply gas to a vast petrochemicals and fertiliser company.

That would add to Shell's vast gas assets in the country including a distribution company and share of a liquified natural gas plant.

Okunbor said: 'We have been revising our strategy in terms of our presence in Nigeria. We have essentially streamlined our footprint such that we pay a lot more emphasis on gas and reduce the oil part of our footprint.

'Even with this divestment we are probably the biggest international oil company operating onshore.

'So it's not like we have fled – what we have done is to focus on gas, which as energy we felt is a more efficient energy source.

'Also, frankly gas compared to oil is easier to manage in terms of some of the issues we face.'

This week, Shell took reporters on a helicopter ride over the Niger Delta to ram home the problem of illegal 'bunkering' where thieves siphon off oil.

Oil that has leaked out of local pipes clings to the shoreline, seeping up to houses and into the mangrove forests. Leaping up from the greenery are flames from refining stolen oil.

Yet also visible is the Bodo Creek area which was devastated by a spill of Shell's corroded pipes in 2008 and 2009, destroying waterways and fishing supplies.