Shell and the Nigerian Gas Revolution

Over the past five years, Shell has remained committed to diversifying beyond fossil fuels into alternative energy sources. This strategy includes expanding its alternative energy portfolio while reinforcing its leadership in natural gas production. This aligns with Nigeria’s governmental initiative to transition to cleaner energy by utilizing gas as a bridging fuel.

Shell intends to leverage its upstream operations, particularly natural gas, to generate revenue necessary for investments in new markets such as clean energy and Compressed Natural Gas (CNG). In 2021, the company earmarked $4 billion for integrated gas projects as part of its broader energy transition plan, with potential allocations for gas initiatives in Nigeria. Shell aims to eliminate gas flaring globally from its operations by 2030, a move that could significantly increase domestic gas utilization in Nigeria.

The Nigerian government has designated 2020-2030 as the Decade of Gas, signaling a shift from gas being seen merely as an adjunct to oil, to a pivotal resource driving economic growth. This policy underscores Nigeria’s commitment to using gas for thermal power generation, industrial growth, fertilizer production, transportation, and exports. However, achieving these goals is hindered by infrastructure deficiencies, inconsistent pricing policies, and regulatory challenges.

Nigeria’s proven natural gas reserves have increased from 203 Trillion Cubic Feet (TCF) to 206.53 TCF, largely due to efforts by local producers who are managing operational risks in the Niger Delta region amidst regulatory complexities.

Shell Business in Nigeria

Shell has been involved in Nigerian businesses for over six decades, holding interests in companies engaged in oil, gas, liquefied natural gas (LNG), and other energy products. These enterprises, collectively known as the Shell Companies in Nigeria (SCiN) and wholly owned by Shell plc, include the Shell Petroleum Development Company of Nigeria Limited (SPDC), which operates oil and gas activities in the Niger Delta; Shell Nigeria Exploration and Production Company Limited (SNEPCo); Shell Nigeria Gas Limited (SNG), part of Shell Energy Nigeria (SEN), supplying gas to domestic industrial and commercial customers; and Daystar Power, offering integrated solar power solutions to commercial and industrial sectors across West Africa.

Additionally, Shell Gas B.V. holds a 25.6% stake in Nigeria LNG Limited (NLNG), responsible for processing and exporting LNG globally. SPDC and SNEPCo also co-own All On Partnerships for Energy Access Limited (All On), an impact investment firm focused on enhancing energy access throughout Nigeria.

Shell Investment in Gas Sector

Shell has made significant strides in the Nigerian gas sector, launching Shell Energy Nigeria (SEN) to accelerate the delivery of competitive and reliable energy, supporting economic development. SEN includes two gas trains with a total distribution capacity exceeding 102 million standard cubic feet per day (mmscf/d), a Pressure Reduction and Metering Station, and a transmission network spanning approximately 150 kilometers. This infrastructure serves over 130 industrial and commercial customers, primarily in Ogun, Abia, and Rivers states. Shell Gas also holds a 25.6% share in Nigeria Liquefied Natural Gas Company Limited (NLNG), which operates six LNG trains with a combined processing capacity of 22 million tonnes annually.

In 2023, Shell Companies in Nigeria, led by Country Chair Osagie Okunbor, approved the final investment decision for an upstream facility at Iseni Field. This facility aims to supply 100 million standard cubic feet of gas daily to the Dangote Fertiliser and Petrochemical Plant in Lagos State over a decade. Shell Nigeria Gas (SNG) also progressed discussions on establishing a new gas distribution network in Oyo State, expanding its operations into the fourth state. This initiative is expected to enhance energy reliability for local industries, foster economic growth, and create job opportunities.

Throughout 2023, Shell Companies in Nigeria emphasized performance, discipline, and operational simplification, resulting in positive outcomes for stakeholders and communities. They awarded $1.98 billion in contracts to Nigeria-registered companies, demonstrating a commitment to local content development. SPDC made significant strides in Bayelsa State, advancing plans to supply gas to the Nigerian Content Development and Monitoring Board (NCDMB) industrial gas park by 2025.

Shell’s initiatives in Nigeria underscore their role in enhancing energy infrastructure, supporting industrial growth, and contributing to local economic advancement.

FG CNG launch and Shell Role in advancing Transition to Gas   

The Federal Government of Nigeria anticipates significant reductions in petrol imports and expenditure through its new Compressed Natural Gas (CNG) programme. Shell has committed to this initiative by signing a $100 million agreement with Oyo State to develop a gas supply and distribution network for industrial and commercial users across the state. Under the 20-year deal, Shell Nigeria Gas (SNG) will build and manage the pipeline network, aiming to deliver up to 60 million standard cubic feet of gas per day, as reported by Shell Nigeria.

Established in 1998, SNG serves over 150 clients across four Nigerian states. The project will commence with a 15-kilometer pipeline and begin gas delivery in the fourth quarter of 2025. SNG’s Managing Director, Ralph Gbobo, highlighted the agreement as a significant milestone, emphasizing its potential to drive industrialization, boost internally generated revenue, and create job opportunities in Oyo State.

Gbobo underscored the project’s alignment with Nigeria’s Decade of Gas initiative, which aims to leverage natural gas for national development. Osagie Okunbor, Managing Director and Chairman of Shell Companies in Nigeria stressed the importance of partnerships in advancing cleaner energy solutions, reflecting Shell’s commitment since the 1960s to delivering competitive and reliable energy solutions in Nigeria.

Oyo State Governor Seyi Makinde praised the project as a catalyst for development, aligned with the state’s goals to promote innovation and industrial growth. Michael Oluwagbemi, Programme Director and CEO of the Presidential Compressed Natural Gas Initiative (P-CNGi) office highlighted natural gas as a cheaper, cleaner, safer, and more sustainable economic option. He emphasized the need for a robust regulatory framework and smart monitoring systems to ensure compliance and identify and address any misconduct within the ecosystem.

The Audacious SNG

SNG is dedicated to providing cutting-edge, clean, cost-effective alternatives to liquid fuels for manufacturing and industrial customers, contributing to Nigeria’s global economic competitiveness. Currently, SNG operates an expanding gas transmission and distribution network spanning more than 138 km across Nigeria, encompassing vital distribution systems such as Agbara-Ota in Ogun State, the Aba Cluster in Abia State, and the Port Harcourt Cluster in Rivers State.

During a period of dynamic growth, SNG has significantly increased its gas distribution capacity by 150%, enabling its infrastructure to deliver over 150 million standard cubic feet per day (mmscf/d) of meticulously processed gas to over 300 industrial clients. SNG is interconnected with more than 100 industrial customers throughout its gas grids.

Furthermore, SNG has established strong partnerships with virtual pipeline operators committed to advancing compressed natural gas (CNG) and mini-LNG grids across diverse regions of Nigeria. This strategic collaboration underscores SNG’s dedication to promoting sustainable energy solutions that resonate globally, aligning with international trends favoring cleaner energy sources and enhanced industrial efficiency.