4 SHELL IN Engineers at the Gbaran-Ubie gas plant. INTERESTS 5

SHELL’S INTERESTS TWO

IN NIGERIA MAJOR OIL EXPORT TERMINALS

Nigeria is a core part of Shell’s global oil and gas business. For more than 60 years, Shell has worked in partnership ONE with the Federal Government of Nigeria, local and international companies, DEEP-WATER FLOATING PRODUCTION, investors, contractors and communities to STORAGE & OFFLOADING (FPSO) VESSEL develop the country’s oil and gas sector. Shell Companies in Nigeria employ nearly 3,000 people and more than 11,000 contractors. SIX Shell is the largest international oil company LIQUEFIED NATURAL in Nigeria and focuses on: GAS (LNG) TRAINS

■ Rejuvenating heartland oil and gas production. ■ Developing deep-water exploration and production. ■ Expanding availability of gas and power. ■ Operating responsibly. 100+ INDUSTRIAL GAS CUSTOMERS

The Nigeria Briefing Notes update on activities and programmes undertaken by several Nigerian companies either wholly-owned by Shell or in which Shell has an interest. Together these are referred to as the Shell Companies in Nigeria (SCiN). Four of these are:

■ Shell Development Company of Nigeria Limited (SPDC); a wholly-owned Shell subsidiary, which operates an unincorporated joint venture (SPDC JV) in which SPDC holds a 30% interest.

■ Two other wholly-owned Shell subsidiaries; Exploration and Production Company Limited (SNEPCo) and Shell Nigeria Gas Limited (SNG).

■ And Nigeria (NLNG) Limited; an incorporated joint venture in which Shell has a 25.6% interest. 6 SHELL IN NIGERIA INTERESTS 7

Shell is rejuvenating its conventional oil SHELL’S INTERESTS IN NIGERIA SUPPLY OIL AND GAS TO DOMESTIC AND GLOBAL MARKETS and gas business by re-opening wells and strengthening pipelines, flowlines and Osun Ekiti Kogi Agbara Ota infrastructure in the , while SNG Owo continuing to develop and grow offshore GAS shallow and deep-water production in FACILITY Forcados Ondo Enugu the Gulf of Guinea. It is also expanding Edo the availability of natural gas for export Lagos and for supply to domestic industries. Benin City Anambra

Onitsha

SHELL INTERESTS IN THE NIGERIAN OIL & GAS SECTOR

NAME OF COMPANY DESCRIPTION AND OPERATING ASSETS Imo Abia MAIN ACTIVITIES

HEARTLAND The Shell Petroleum Supplies onshore and Operator and 30% participant interest holder in SPDC joint venture: Wagner FPSO Development shallow water oil and ■ 340 producing oil wells (97 land, 181 west and 62 central assets). Forcados Company of Nigeria gas to domestic and ■ 56 producing gas wells (10 land, three west and 43 central assets). EXPORT Limited (SPDC) export market TERMINAL ■ A network of approximately 4,000 kilometres of oil and Gbaran gas pipelines and flowlines. Tunu Processing Sea Eagle Facility ■ 10 gas plants. Processing Facility FPSO Akwa Ibom ■ Two major oil export terminals. Soku Gas Plant Bonga Main ■ One power plant. FPSO DEEP-WATER Shell Nigeria Produces deep-water Operator of the floating production, storage Exploration and oil and gas and offloading vessel (FPSO). Bonny Nigeria LNG Production Company Interests in two Shell-operated deep-water blocks under Niger Fan EXPORT Limited (SNEPCo) production sharing contracts: EXPORT ■ Bonga (OML-118 – 55% interest) and Bolia/Doro TERMINAL TERMINAL (OML-135 – 55% interest). Gulf of Guinea Interests in two non-operated deep-water blocks: ■ Zabazaba, Etan (OPL-245 – 50% interest) operated by Agip under a production sharing agreement. ■ Ehra (OML-133 – 43.75% interest) operated by Esso under a production sharing contract.

GAS FOR Shell Nigeria Gas Only Nigerian subsidiary Operator and 100% Shell share: GLOBAL MARKETS NIGERIA NIGERIA Limited (SNG) of an international oil ■ Two LNG trains with processing capacity of over 100 mmscfd. company in domestic ■ Pressure reduction and metering station. gas distribution ■ Gas transmission and distribution network of EXPORT OIL EXPORT GAS DOMESTIC GAS approximately 150 kilometres. ■ Serving over 100 industrial and commercial customers, mostly in Ogun, Abia, and Rivers states. REJUVENATING HEARTLANDS EXPANDING NATURAL GAS GAS FOR Nigeria Liquefied Processes and exports 25.6% shareholder in NLNG joint venture: EXPORT Natural Gas Company liquefied natural gas ■ Six LNG trains with total processing capacity of 24.1 million tonnes Limited (NLNG) (LNG) a year of LNG and up to 5 million tonnes of natural gas liquids (Deep- (LPG and condensate) from 3.5 billion standard cubic feet per 11% 4% water) 359 MT ~120 day of natural gas. SPDC JV PRODUCTION SNEPCo PRODUCTION LNG GLOBAL DEMAND SNG CUSTOMERS ■ NLNG is serviced by fleet of 23 LNG vessels. GROWTH GROWTH 8 SHELL IN NIGERIA INTERESTS 9

REJUVENATING HEARTLAND OIL The SPDC JV’s production has shown significant growth AND GAS PRODUCTION over the past three years. The SPDC JV increased its 2019 ELIMINATING production to 514,000 boe/d from 465,000 boe/d CONTINUOUS FLARING The Shell Petroleum Development Company in 2018. The growth was delivered through improved of Nigeria joint venture (SPDC JV) availability and increasing activity levels. Oil production As a signatory to the World Bank’s “Zero Routine A series of investments by the SPDC JV since 2010 is exported to global markets via the Forcados and Bonny Flaring by 2030” initiative, Shell continues to pursue to capture and commercialise associated gas for The SPDC JV’s assets include: Terminals as well as the Sea Eagle floating production its 2015 commitment to eliminate associated gas domestic and export markets has decreased routine ■ 340 producing oil wells (97 land, 181 west storage and offloading (FPSO) vessel. Gas is supplied to flaring from its operations around the world, flaring by almost 90%. Recent examples include the and 62 central assets). the domestic market and to the export market through the including Nigeria. Southern Swamp, Forcados Yokri, Oloma, Adibawa Nigeria LNG plant. The SPDC JV supplies approximately ■ 56 producing gas wells (10 land, three west and Otumara gas gathering projects. Remaining 50% of the Nigeria LNG plant capacity largely from and 43 central assets). Since 2000, all new SPDC JV facilities are designed sites with low volume flares are in remote areas and the Gbaran-Ubie and Soku plants. Soku gas production to have no continuous flaring. Soku, Bonny, Gbaran SPDC has been working with the federal government ■ A network of approximately 4,000 kilometres increased from 100MMscf/d in 2018 to 350MMScf/d and Agbada facilities have fully functional solutions and other partners to develop small-scale projects to of oil and gas pipelines and flowlines. in 2019. to address routine flaring. For other facilities, solutions capture the associated gas for local use. ■ 10 gas plants. have been identified to capture the associated gas. The SPDC JV has produced neither oil nor gas in ■ Two major oil export terminals. Progress continues to be made and a further Ogoniland since 1993 and has transferred operatorship reduction in flaring is anticipated in 2020 and ■ One power plant. of its assets in Ogoniland to the Nigerian Petroleum beyond. However, flaring did increase by about ■ Development Company (NPDC). However, the Trans One shallow water FPSO (“Sea Eagle”). 20% in 2019 compared with 2018 due to the Nigeria Pipeline (TNP), which belongs to the SPDC JV re-opening of the Trans Ramos Pipeline and the and carries crude oil from various companies, passes Key developments 2019: delayed start-up of some gas gathering projects. through Ogoniland. The SPDC JV responds to any ■ The SPDC JV production rose more than 10% operational incident that may occur on the TNP as well as to 514,000 barrels of oil equivalent per day. sabotage and theft incidents on its assets in the region. ■ 106 producing wells added. ■ Trans Ramos Pipeline re-opened. The SPDC JV, in compliance with statutory requirements, paid more than $116 million in 2019 to the Niger Delta ■ Gbaran-Ubie gas plant achieved peak production Development Commission (NDDC), which undertakes with 175,000 barrels of oil equivalent per day. sustainable development projects in the Niger Delta area.

The Shell Petroleum Development Company of Nigeria joint venture (SPDC JV) focuses on oil and gas production in the Niger Delta. The joint venture has the largest acreage in the country and operates a leased area of 31,000 square kilometres. It produces more than half a million barrels of oil per day on average with additional capacity to produce more.

Shell Petroleum Development Company of Nigeria Limited (SPDC), wholly-owned by Shell, has a 30% interest in the SPDC JV and is the operator. Other partners are Nigerian National Petroleum Corporation (NNPC, 55%), Total E&P Nigeria Ltd (10%) and subsidiary Nigerian Agip Oil Company Limited (5%).

Following divestments of some assets in the Warri area of the Niger Delta, the SPDC JV is improving its remaining assets. The company is restoring and repairing oil and gas wells. Many of these wells were either damaged or closed due to previous unrest. The Trans Ramos Pipeline, which feeds into Shell’s Forcados oil export terminal, is once Routine gas pressure meter readings Bringing new facilities into operation that again supplying crude oil after being shut due to leaks being taken at the Gbaran-Ubie gas plant. collect gas that was once flared (Gbaran-Ubie). in 2018. 10 SHELL IN NIGERIA INTERESTS 11

DEVELOPING DEEP-WATER EXPLORATION AND PRODUCTION

Shell Nigeria Exploration and Production Company Limited (SNEPCo)

Operator of the Bonga field floating production, storage and offloading vessel (FPSO): Interests in two Shell-operated deep-water blocks under production sharing contracts: ■ Bonga (OML-118 – 55% interest) and Bolia/Doro (OML-135 – 55% interest). Interests in two non-operated deep-water blocks: The 12-storey high Bonga floating production, ■ 1 Zabazaba, Etan (OPL-245 – 50% interest) operated storage and offloading (FPSO) vessel. by Agip under a production sharing agreement. ■ Ehra (OML-133 – 43.75% interest) operated by Esso under a production sharing contract. Key developments 2019: ■ SNEPCo production rose to 164,000 barrels SNEPCo contributes around 22% to Shell’s global deep- of oil equivalent per day from 158,000. water oil production and its growth ambitions include ■ Bonga operational availability improved expansion of natural gas production. to 94% from 85% in 2018. In addition to Bonga, SNEPCo’s exploration activities have led to several significant discoveries of oil and gas Shell Nigeria Exploration and Production Company over the last two decades, including Bolia, Zabazaba Limited (SNEPCo) pioneered deep-water oil and gas and Doro fields. production from the Bonga field in the Gulf of Guinea where depths reach more than 1,000 metres. When CONTRIBUTORS TO SHELL’S Bonga began production in 2005, it increased DEEP-WATER OIL PRODUCTION Nigeria’s oil production capacity by 10%. Today, CONTRIBUTORS TO SHELL’S A 7th generation, state of the art, twin-decked rig is currently active over the southwestern portion of the Bonga field. nearly one-third of Nigeria’s deep-water production DEEP-WATER OIL PRODUCTION comes from the Bonga and Erha fields. SNEPCo 22% SNEPCo, a wholly-owned Shell company, has interests BONGA 7TH GENERATION RIG in four deep-water blocks; two of which it operates. The SNEPCo 22% ACHIEVES WORLD FIRST company develops and deploys the latest deep-water drilling techniques to reduce drilling times, cut costs and “It’s incredible,” says Elohor Aiboni, Bonga Asset Also, on the Bonga field is a floating production, increase production. Operations Manager, describing the new rig active storage and offloading (FPSO) vessel with a total over the southwestern portion of the Bonga field production capacity of 225,000 barrels of oil per The Bonga floating production, storage and offloading where Shell Nigeria Exploration and Production day and 150 standard cubic feet of gas export per (FPSO) vessel has a total production capacity of 225,000 Company Limited (SNEPCo) operates. day. The height of a 12-storey building and spanning barrels of oil per day and 150 standard cubic feet of gas an area the size of three football fields, the FPSO export per day. Since production began in 2005, Bonga The secret to SNEPCo’s success is its deployment explores for and extracts oil from more than 1,000 alone has produced about 880 million barrels of oil. In of the latest proven technology when it comes to metres below sea level. 2019, the FPSO improved its availability from 85% in 2018 exploring and developing the oil and gas fields in to 94% in 2019 meaning more production capacity. the deep waters of the Gulf of Guinea. This new 7th Since production began in 2005, Bonga has Rest of generation, twin-decked rig cuts drilling times and produced about 880 million barrels of oil. In 2019, SNEPCo’s production in 2019 rose to 164,000 boe/d Shell 78% costs and was the first in the world to perform a well- it improved its availability to 94% from 85% in 2018. from 158,000 and this was largely due to Bonga. Rest of drilling completion operation in a single trip rather Shell 78% than several. The operation entailed placing valves SNEPCo contributes 22% to Shell’s global and delicate instruments in the well. 1Authorities in various countries are investigating our investment in Nigerian oil block deep-water oil production. OPL 245 and the 2011 settlement of litigation pertaining to that block (see Note 25 to the Consolidated Financial Statements in PLC’s Annual Report). 12 SHELL IN NIGERIA INTERESTS 13

EXPANDING AVAILABILITY Gas from the SPDC JV and the Bonga deep-water field OF GAS AND POWER is piped to the NLNG plant on Bonny Island. Here it is cooled to produce LNG for export to consumers in Nigeria LNG and Shell Nigeria Gas Limited Atlantic Basin countries, such as Spain, Italy, Turkey, Mexico and the US, as well as markets in Asia. NLNG assets include: ■ Six LNG trains with a total processing capacity SNG is the only wholly-owned gas distribution subsidiary of 24.1 million tonnes a year of LNG and up to five of an international oil company in Nigeria and is at million tonnes of natural gas liquids. the forefront of providing domestic gas to industrial customers and manufacturing plants. SNG markets ■ NLNG is serviced by a fleet of 23 LNG vessels. gas within Nigeria as a more reliable and affordable alternative to liquid fuels and its gas is used by local SNG assets include: manufacturers to make household consumables, ■ Two gas trains with network capacity utensils and hardware. SNG is the only gas distribution of over 150 mmscfd. company in Nigeria certified according to the ISO14001 ■ A pressure reduction and metering station. international standard for an effective environmental management system. ■ Gas transmission and distribution network of around 150 kilometres, serving over 115 industrial and commercial customers, mostly in Ogun, Lagos, Abia, and Rivers states.

Key developments 2019: ■ Southern Swamp Associated Gas (SSAGS) and Forcados Yokri facilities achieved first production. ■ Assa North/Ohaji South Gas Development Project construction begins. ■ NLNG took the Final Investment Decision to build seventh LNG production line subject to conditions2. ■ SNG increased its gas processing capacity by over 150%.

Shell is working with the Federal Government of Nigeria to expand the availability of gas for Nigerian industries and export to world markets. Shell has interests in two gas supply operations in Nigeria: the Nigeria Liquefied Natural Gas (NLNG) Limited joint venture and the wholly-owned Shell Nigeria Gas Limited (SNG). Both are supplied with gas by SPDC and SNEPCo. LNG OUTLOOK NLNG accounts for about 7% of the world’s total LNG production and is a joint venture between four natural gas Global demand for liquefied natural gas (LNG) suppliers: NNPC (49%), Shell (25.6%), and subsidiaries grew by 12.5% to 359 million tonnes in 2019, of Total (15%) and ENI (10.4%). NLNG processes and according to Shell’s latest annual LNG Outlook exports liquefied natural gas (LNG) and Shell provides – a significant increase that bolsters LNG’s technical services to NLNG with approximately 20 staff growing role in the transition to a lower-carbon members seconded to support operations. energy system.

View more information on the LNG Outlook here. One of several giant gas tanks at the NLNG export terminal. 2FID is subject to certain conditions being met. 14 SHELL IN NIGERIA INTERESTS 15

OPERATING RESPONSIBLY Operating with integrity In Nigeria, Shell insists on the same ethical and EMPOWER PEOPLE TO SUCCEED Safety behavioural standards as elsewhere in the Shell Group. Shell has a set of core values – honesty, integrity and Safety and security remain top priorities and Shell applies Interview with Elohor Aiboni, respect for people – which underpin the work done. international standards to help create a safe operating Asset Manager Bonga FPSO For the last two years, Shell Companies in Nigeria have environment. We work closely with communities, civil Education: Bachelor in Chemical Engineering, hosted a day-long event on Ethics and Compliance. society, contractors and joint venture partners, as well MSC in Environmental Management In 2019, Mele Kyari, the Group Managing Director of as federal and state government agencies to promote a Joined Shell: April 2002 secure and safe environment. NNPC joined the session with his leadership team as guests. Impact: Shell companies aim to achieve no harm to people and Our operational availability is back on track. The Shell General Business Principles, Code of Conduct no leaks across operations. Shell refers to this as the Goal Our safety record is good and we’re in control and Ethics and Compliance Manual help Shell employees, Zero ambition. In Nigeria, Shell drives safety performance of costs. We’ve got to ensure that our operational contractors and those working in joint ventures that we by constantly discussing with staff their challenges and availability remains high and that we stay operate act in line with these values and comply with dilemmas. Shell expects staff and contractors to comply efficient and safe. with safety rules and regulations relevant to their work, relevant laws and regulations. to intervene to prevent unsafe conditions, and to respect Approach: The Shell Code of Conduct supports every employee and fellow workers and the communities in which we work. The magic starts when you empower people. My contractor who works for or on behalf of Shell. It sets out teams know the asset better than anyone, so we expected behaviours of Shell employees and how they In 2019, Shell Companies in Nigeria focused on three ask them to speak up. We train across multiple relate to the Shell Business Principles and Core Values. safety areas: improving how managers stop unsafe work disciplines and use digital tools to improve in their teams, preventing objects being dropped from productivity. We keep safe by creating ‘family units’ Shell’s Ethics and Compliance Manuals build on the height – a common hazard in the industry – and that look after each other and celebrate success. marine safety. Shell General Business Principles and the Shell Code of Conduct to provide practical advice on how to comply Hopes: with laws and regulations and how to relate to customers, However, in 2019, there were 16 cases of personal injuries The Bonga field is prolific and we see a future. It’s communities and colleagues. that required medical treatment or time off work at Shell professionally satisfying to know that we have the Companies in Nigeria. And tragically, in 2019, two technology to get through our drilling campaign Shell subsidiaries and associates operating in Nigeria contractor personnel working for the SPDC JV died when and our cost journey. If the government creates the are party to various environmental and contractual an oil and gas vessel they were travelling on capsized in right investment climate then there could be more disputes brought in the courts of Nigeria, England bad weather. The government regulator is yet to share oil and gas finds with the potential to expand and and the Netherlands. its investigation into the cause(s) of the incident at the create jobs and opportunities for people. time of publishing this report. As always, we will review the findings and learn from the investigation to avoid this Challenge: happening again. We aim to work up new projects and investment opportunities that meet international standards. Shell Companies in Nigeria continue to contribute to the Without these opportunities, Shell loses and safety of communities around facilities by responding to Nigeria loses. As a Nigerian, I don’t want that. third-party emergencies in the communities where they operate. In 2019, Shell companies responded to 44 of these incidents, including an overturned fuel tanker and a search and rescue operation on a collapsed hotel building under construction, both in .

Empower people THE MAGIC STARTS WHEN YOU EMPOWER PEOPLE. to succeed. Elohor Aiboni, Elohor Aiboni, Asset Manager Bonga FPSO. Asset Manager Bonga FPSO CAUTIONARY NOTE

The companies in which Royal Dutch Shell plc directly and indirectly fluctuations; (d) drilling and production results; (e) reserves estimates; owns investments are separate legal entities. In this Briefing Notes (f) loss of market share and industry competition; (g) environmental “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for and physical risks; (h) risks associated with the identification of suitable convenience where references are made to Royal Dutch Shell plc and potential acquisition properties and targets, and successful negotiation its subsidiaries in general. Likewise, the words “we”, “us” and “our” and completion of such transactions; (i) the risk of doing business in are also used to refer to subsidiaries in general or to those who work developing countries and countries subject to international sanctions; for them. 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SPDC Remediation and Response Team sets out to deal with a spill.