Shell Nigeria loses billions of Dollars to encroachment on pipeline-right of-way


By Kayode Ajayi

Encroachment by host communities on pipeline right-of-way (PROW) constitutes serious challenge for the Oil and Gas sector, most especially, Shell Petroleum Development Company of Nigeria Limited (SPDC). SPDC is one the largest oil producer in Africa and the 1st largest in Nigeria, while Oil remains the mainstay of the nation’s economy.

As a matter of fact, SPDC alone contributes extensively to the internally revenue generation of the Federal Government of Nigeria through taxes, royalties and levies paid on the production and supply of Oil. In 2018, Shell produced an average of 617, 700 barrels of Oil per day (boe/d).

With this, one could have said Shell have the capacity to even produce more than this percentage in a day if third party interference such as crude oil theft, oil sabotage and criminal activity in some parts of Niger Delta region inhibitor of SPDC Oil facility hasn’t been grossly interrupted.

According to a report filled by Shell, the company has counted numerous incident of oil spill across its facilities this year, while connecting such cases to sabotage in crude oil theft and pipeline vandalism. SPDC lamented while attributing their major loss of billions of dollars to the Federal Government on yearly basis due to this challenge.

Shell manager on the Community Relations, while addressing the press some weeks ago emphasized that about 11,000 barrel per day were lost to crude oil theft and encroachment on its facilities. He expressed worry that people live in the houses built on the pipeline facilities are not conscious of the fact they were having romance with untimely death. The pipe contains hydro-carbon elements which is highly inflammable and could lead to fire explosion any moment.

Public should always be aware that any house built on crude oil pipeline is not fit to live and could be forfeited at any time since such structures is illegally built on pipeline channel and could be razed down by fire if any minor strike occurs.

In a bit to salvage this kind of an horrible situation, relevant agencies needs to swing into actions and take a bold step such as engaging concern people on the need to evacuate their properties from the danger zones. Any further delay in taking action or rather inaction may worsen the situation more. Such inaction by the appropriate government agencies has largely encouraged encroachment by members of the public in many ways.

Reactions from SPDC Manager, Encroachment and Community Relations reiterated the company’s commitment in addressing social and developmental challenges affecting the communities in which they operate and solicited for the collaborations of the media in the campaign against encroachment into Shell facilities

Another medium at which this menace can be resolve is, Shell should engage the public more in their sensitization programme on the issue of encroachment and perhaps localize it as this would create more awareness within the people in the local village most especially the company’s host communities.

Public announcement on the media focusing on the campaign message would also help in educating the people on the dangers that lies in encroaching on pipeline right of ways.

More so, federal government should also note that this challenge has direct impact on the nation’s economy because the losses incurred by the company while shutting down its facilities due to crude oil sabotage invariably affects  the economy of the nation and Shells capacity to increase its commitment to community development.


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