Shell Distances Self From Supreme Court Judgment On Crude Diversion

Dutch Oil giant, Shell Petroleum Development Company, has distanced itself from allegations tying it to a ruling by the Federal High Court in Lagos where an interim ex-parte order freezing the bank accounts of some of its named companies in Nigeria was issued over allegations of crude diversion.

In a statement on Friday, the oil company said that linking the court order to the allegation of crude diversion against Shell Petroleum Development Company of Nigeria Limited was untrue.

It explained that the interim freeze order obtained by the plaintiff, Aiteo Eastern E&P Company Limited, relate to the SALE of the interests of SPDC and two other SPDC JV partners in the Nembe Creek Trunk Line and OML 29 to Aiteo in 2015; and crude reallocation programme between injectors into the SPDC JV’s Trans Niger Pipeline and injectors into Aiteo’s NCTL which is a normal industry practice.

According to the company, the disputes are subject of ongoing litigation and SPDC is working to secure an expeditious discharge of the freezing injunction which it believe was obtained by Aiteo without any valid basis.

It said “The crude theft/diversion allegation is also factually incorrect. This is a distinct issue that relates to the directive by the Department of Petroleum Resources to SPDC as operator of the Bonny Oil and Gas Terminal, an asset belonging to the SPDC Joint Venture, to implement a crude re-allocation programme between injectors into the SPDC JV’s Trans Niger Pipeline and injectors into the NCTL.

“Crude allocation review and re-allocation is a normal industry practice to re-allocate previous provisional allocated volumes under the directive and supervision of DPR, and this is not an exercise resulting from crude diversion, under-reporting or theft at the terminal.

“This industry practice is not peculiar to the SPDC-operated Bonny Oil and Gas Terminal alone and does not translate into any loss of volumes to the Federal Government of Nigeria”

It explained that the re-allocation in issue was initiated by SPDC as operator of the Bonny Oil and Gas Terminal, while the Department of Petroleum Resources validated and confirmed it for implementation for the concerned oil producers.

The statement added that Crude oil production metering and allocation are subject to specific guidelines issued by the industry regulator, DPR. SPDC strictly adheres to these guidelines and the implementation is regularly verified by the regulator.

“The Department of Petroleum Resources, in response to media enquiries on Saturday 13th February 2021 described the allegations of crude diversion/theft against SPDC as untrue and urged that the allegations be disregarded.

“SPDC and all Shell companies in Nigeria are responsible Corporate citizens who conduct their operations in accordance with applicable laws and industry best practices,” it added.