Oil giant, Shell, has said the responsibility for remediating the environmental impacts from its operations as well as historical spills that had not been cleaned up when its $2.4 billion onshore oil assets transaction is completed will be taken over by its Joint Venture (JV) partners.
In a document detailing Frequently Asked Questions (FAQs) relating to the deal released on its international website, the British multinational stressed that the roles and responsibilities of the SPDC JV partners will remain unchanged.
Shell, which recently announced the deal with a consortium of five oil firms, stated that SPDC will continue to be accountable for its share of commitments within the JV to conduct any remediation, where spills might have occurred in the past from its operations.
By preserving the full range of SPDC’s operating capabilities, Shell stated that it will continue to carry out its commitment within the JV, including those relating to health, safety, security and environment.
The company, which has operated in Nigeria for over 60 years, recently announced the planned sale of its onshore oil assets to a consortium of four Nigerian oil firms and one foreign business concern.
Many residents of the environmentally degraded Niger Delta region have recently raised concerns that the international oil company, which is now focusing on offshore oil operations, plans to abandon their polluted environments, partly caused by Shell.
On its role in the Hydrocarbon Pollution Remediation Project (HYREP) in Ogoni land, Shell stated that it would have fully funded its share of the financial commitments of the SPDC JV to HYPREP at completion of the transaction.
HYPREP was created by the federal government to address the recommendations made in the 2011 United Nations (UN) report.
On whether communities were consulted, Shell explained that the transaction was a share sale, whereby the ownership of SPDC changes but SPDC retains its operating capabilities, management frameworks and key expertise that it uses to operate on behalf of the JV.
Shell stated, “Engagement with communities is and will remain an integral part of SPDC’s day-to-day operations that it conducts on behalf of the JV. The frameworks under which those relationships are managed will be kept intact.”
It added that the communities will experience no change in their day-to-day dealings with SPDC as a result of the transaction.
Shell also said it will continue to carry out its mandatory funding by the SPDC JV of the Host Community Development Trusts established by SPDC in accordance with Nigeria’s Petroleum Industry Act (PIA).
Separately, Shell pledged to establish and fund a foundation outside the announced transaction that will be focused on business enterprise and start-ups, promising to share details in due course.
Meanwhile, Shell on Thursday reported a 2023 profit of $28 billion, a 30 percent drop from the previous year’s record as energy prices and demand cooled, but still allowed the firm to increase its dividend by four percent and extend its share repurchases.
Shell’s shareholder distributions reached around $23 billion in 2023, over 10 percent of its market value, highlighting investors’ focus on returns as the sector grapples with an uncertain outlook for fossil fuels.
Shell’s 2023 profits were marked by lower chemicals and refining profit margins and slower fuel sales amid sluggish global economic activity following a blockbuster 2022 fuelled by a surge in energy prices after Russia’s invasion of Ukraine.
It ended the year on a strong note, posting fourth-quarter adjusted earnings, its definition of net profit, of $7.3 billion, exceeding analysts’ expectations of $6 billion profit but down from a record $9.8 billion a year earlier.
Strong liquefied natural gas (LNG) trading results in the quarter helped offset weaker refining and oil trading results, Shell said.
“As we enter 2024 we are continuing to simplify our organisation with a focus on delivering more value with less emissions,” Chief Executive Officer, Wael Sawan, noted.
The British company also announced the repurchase of a further $3.5 billion of its shares over the next three months, a similar rate to the previous three months.
But in a worrying sign for the firm, Shell’s free cash flow, or excess money after investment, fell to $7 billion in the fourth quarter, the lowest in 2023 and less than half the previous year’s $15.5 billion, Reuters reported.
Shell took pre-tax impairment charges of $5.5 billion, with $2.5 billion due to reducing the value of its chemicals business in Singapore, $1.2 billion due to revisions of oil and gas operations in Nigeria, Britain and North America and $873 million due mostly to revisions of LNG production estimates in Australia.
Shell reduced annual costs by $1 billion over the past year, Chief Financial Officer Sinead Gorman said, while its capital expenditure reached $24.4 billion in 2023 and is expected to range from $22 billion to $25 billion this year.
Emmanuel Addeh
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