Europe’s biggest oil company, Royal Dutch Shell has pledged to assist Nigeria with a loan to finance its crippling oil industry. The loan is meant to assist the Nigerian government put an end to an environmentally damaging gas flaring situation in the Niger Delta, which needs $3 billion to fix.
Nigeria, despite having one of the world’s largest oil and gas reserves has fallen short of capital to meet its oil industry demands. This has prevented the country from meeting its share of the funding requirements of oil related activities and thus limited the ability of foreign oil corporations to continue investing in Nigeria.
In the wake of Nigeria’s inability to fund its oil related issues, such as the excess gas flaring problem, Royal Dutch Shell is offering the country $3 billion loan at very low interest rates. Reports claim that about $1 billion has already been allocated to the project, and the remaining $2bn is soon to be confirmed.
Royal Dutch Shell is offering to help out Nigeria in this time of lack despite the oil company’s predicaments operating in the Niger Delta region. In June last year, Shell’s Bonga offshore oil facility was attacked by rebel militant groups and its chief executive Jeroen van der Veer, say the company’s losses in oil production since the violence in the Niger Delta peaked in 2006 and has remained steady at about 180,000 barrels of oil each day.
However, the Nigerian government plans to restructure its oil industry into joint ventures, where the Nigerian National Petroleum Corporation may be reduced into a minority shareholding position to raise funds on global markets. Until now, Royal Dutch Shell, Agip and Chevron operate in Nigeria in partnerships with the NNPC, which has majority stakes of between 56 and 59 per cent.
Nigeria’s financial shortage, widely reported to have been caused by criminal activities such as oil bunkering, vandalisation of petroleum facilities, and the incessant Niger Delta militant attacks on oil corporations, has hindered the development of Nigeria’s resources.
Unconfirmed reports have also claimed that as many as 100,000 barrels are stolen each day by miscreants in the Niger Delta who bore holes in oil pipelines or siphon the oil in commercial amounts directly from wellheads. The stolen oil is then, reportedly, exported by barges to South America and Eastern Europe, where they are are sold on the black market. The London-based Times claimed that oil companies in Nigeria are losing as much as $1.6 billion of crude a year to theft.
