Shell Nigeria explains lack of interest in refinery: It’s not a viable business

Shell Petroleum Development Company on Thursday said refinery business is a no go area for it in the country after about 70 years in operation, because it “is not a viable business.”

According to Mr. Malcolm Brinded, out-going Executive Director, Upstream International, who came on a farewell visit to State House, refinery is not a viable business as there is surplus of refinery all over the world.

Besides, he said gas had more potential when compared to building refinery.

“We are not investing because essentially there is a surplus of capacity of refineries in the world and actually it’s a global business.

“There is surplus of refinery capacity which essentially means many refineries in the world run at a loss. Which also means one can get refine products back again and pay very little for it to be refined,” he said.

When reminded that it had not been the case with Nigeria, he said, “it isn’t essential for very country to have their own refineries to do all the capacity they need, not in today’s world, because there is surplus available and therefore it means you can get that capacity and those refined products. As long as that trade is well and disciplined and well controlled, there is a surplus of refined products available in the world that can meet the needs of countries.”

He further added that, “With respect to downstream, two comments there, Shell is divesting refineries all over the world because there is a surplus of refineries, we no longer own any refineries even in the United Kingdom. I will also say because of the surplus of refineries available in a way, one has to look very closely whether building new refineries is a good investment for anyone not just for Shell but for countries involved. In today’s world, not looking at the past but where we are today.”

He also hinted that the oil company was concentrating on the gas sector because of its potential which according to him was “much more than to consider refining.”

He said, “I do believe that investment in the downstream sector especially gas sector in Nigeria as I touched on is very important. Nigeria has huge resources of gas that is yet to be unlocked and the potential to add to that gas not only in power but in other ways in the country. I think there are a lot of opportunities for Nigeria and for Shell in Nigeria and the potential much more than to consider refining.

“What I will say is that we continue to invest in particularly in developing the gas sector, the power sector. I’m very proud we built the Afam power station in my time, it was a decision I took myself after talking to the then Mr. President and we went ahead and press on with the 650mw power station.”

On the concentration on exporting gas rather than supporting domestic supply, particularly government’s drive to develop the power sector, he said, “yes if you look at our reinvestment over recent years, particularly the involvement and the building of Afam power station, the construction of the Baron UBA and it’s supply to local power and now as we look at the next round of projects, we tend to be involved in the development of the local gas sector for use in power, commercial, industry and so forth. If I look back 10 years ago, we might have done more, but today, I completely agree is a very important sector for the country and is important sector for Shell in this country.”

On the issue of oil spillage, he said most of the spills were caused by bunkering.

“I think the first thing is to distinguish between operational spills which shouldn’t happen and the spills that come form bunkering and theft, which of course we will be pleased to see absolutely stopped.

“Our focus is on cleaning up spills whatever the course, but of course we feel we must prevent the spills that come from our own operations. We are looking and addressing how we can we make sure that the way we remediate and clean up spills is done to the highest international standards and especially how can we give confidence to local communities that the attribution of the spills have been correctly done. And we are making moves to bring in more independent observations of that process of how we determine cause of spills.”

One Comment

1. 

   Anonymous

   March 3, 2012 at 1:53 pm

   Businessman talk.
   Welcome to the new Nigeria .
   Good Morning