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Shell has no plan to invest in oil refining in Nigeria – Mike Mullier

By on September 22, 2011

The Anglo-Dutch oil giant, Shell, said it has no plan to invest in oil refining in Nigeria.

The Global Leader Crude Trading, Shell Trading, an arm of Shell Group, Mr Mike Mullier, diclosed this while fielding questions from reporters at the ongoing Africa Energy Week in Accra, Ghana.

Mullier said Shell no longer considers downstream crude processing lucrative, adding that the company has already saturated its downstream portfolio.

He identified low returns on downstream investments andpeculiar situation in some African countries including Nigeria where the government regulates prices of petroleum products.

He said some of these fears had made Shell to shut down it downstream operations long ago. He said the company has no intention of expanding it downstream portfolio in Africa where, especially in few countries, where Shell still retains some refining businesses.

The company’s investment direction, he explained, is  focused in high profit areas that offer growth opportunities and make adequate returns on investors’ funds.

Mullier’s pronouncement may have sealed off any hope of private investment in refinery in Nigeria domestic refining, especially as Shell is Nigeria’s biggest petroleum industry operator and produces nearly half of the country’s total crude oil production.

The statement also puts question mark on investors’ assessment of government’s appeals and policy incentives, especially in encouraging the multinational oil firms to assist in boosting the domestic refining capacity.

The statement  came a week after the Akwa Ibom State government declared withdrawal from the highly advertised Amakpe Refinery, which has been highly rated ahead of other licencees for construction of refineries.

The government over the years has restated commitment to refining in-country 50 per cent of the total oil production, but without any indication of implementation.

The Petroleum Industry Bill (PIB),  meant to give direction to the oil and gas industry and encourage private investment through deregulation of the downstream sector and unbundling of the Nigerian National Petroleum Corporation, has been in the National Assembly for about two years awaiting passage into law.

Nation

2 Comments

  1. Christian-New York

    September 25, 2011 at 6:14 pm

    I have always been an advocate to Nationalize, yes nationalize some of Shell’s oil fields. Shell had never and will never have the interest of Nigeria in its corporate heart. According to Mr Muller, if his investment portfolis is saturated will down stream investment, and he cares little about refining petroleum in Nigeria (despite the fortune Shell has made in Nigeria to develop his native Dutch homeland) then Shell needs to relinquish some of the oil fields it is drilling to a company, willing to build new refineries in Nigeria. It is an insult to inform your host country, Nigeria, that Shell will not build any refineries despite the provision in the (yet to be passed) Oil Reform Bill which requires Exxon, Shell etc to build such. Shell has become an arrogant corporate-prick that thinks it is bigger than Nigeria. Its past Managing Director (before Muller) was once summoned before the Senate two years ago, but refused to appear. I dare any one to disprove this info. about his refusal. Muller is demonstrating the same arrogance. Allison-Dezani MUST not allow these arrogant corporations to think they can rape Nigeria with ampunity.
    If Shell cannot build refineries in Nigeria except to drill and sell our oil, without consideration for Nigeria’s power needs then it must be made to relinquish some oil fields to a company that will.
    There is a new sherif in town and such enforcement must be in the new Oil Reform bill.

    • Proctor

      September 28, 2011 at 7:23 pm

      Christian,

      What Nigerians, and more specifically, NNPC and the Nigerian Government, fail to ever realize is that NO reputable private entity will ever directly invest the amount of capital required to build a new, greenfield refinery in Nigeria.  It will never happen, period.  Anything short of this realization is continuing down the same road of false hope perpetuated by every past Administration. There is substantially too much risk associated with that kind of development in-country.  Until the government can create a better, i.e. politcally, commercially, and physically secure environment for foreign investors, no direct FDI will occur.  Past US entities willing to invest in new refineries in Nigeria requested certain guarantees from NNPC and the GON (not outside of industry norms); more specifically, they were modeled after what guarantees the country of Colombia offered foriegn investors years ago.  Look at Colombia today!  It works.  unfortunately, Nigeria is governed, albeit by default, by an oligarchy of families who don’t wish to ever see the status quo changed.  They make too much money off the current failed situation.  At the risk of sounding political, until the will within Nigeria can change itself, no one outside of Nigeria will ever care to help Nigeria.  It remains a failed sate if there ever has been.  An incredibly sad story.