Cost of oil business in Nigeria high — Shell

Shell Petroleum has said that the reason for its divestment in some rig assets in Nigeria is partly due to the high cost of doing business and the degree of political risks in the country.

Speaking at the Nigeria Oil and Gas (NOG) conference in Abuja on Tuesday, the Executive Vice President, Sub-Sahara Africa, Shell Exploration and Production Africa Ltd., Ian Craig, stated that though Nigeria’s deepwater development was impressive, but when compared with Angola, it was clear that it was quite expensive to operate and the pace of development was well below full potential.

According to him, “a typical land-based well costs about $20 million to drill in Nigeria, deepwater costs can be well over $100 million. One is  not enough to prove a prospect, you normally need several appraisal wells to be sure that a discovery is viable.”

He also explained the effect of high degree of political risks which may include the effect of the Petroleum Industry Bill (PIB), if passed, on the activities of the International Oil Companies (IOCs).

He, however, noted that Shell was not averse to risks and had made several efforts to minimise the potential impact of the risks.

“Before we sink billions of dollars into projects that may take a decade to return to capital, we try to ensure that necessary fiscal, legal and political structures are in place,” he stated.

-Tribune

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Posted by admin on Feb 21 2012. Filed under Headlines, Oil Politics. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry